"...ideologically and generationally linked to the rebellious generation of the 1960s..."?! Do Hayek, the Mont Pelerin Society, the devotees of Reagan and Thatcher, the Chicago School, Powell of the Powell Memorandum and the many free-market fundamentalist economists who have dominated the profession since the 50s and their ilk fall into this category? Or are you referring to Yuppies, Sloane Rangers, ex-hippies and all those types who transitioned from the streets of 68, and the Red Brigades, to become hard-line Atlanticists, business executives and members of the PMC and the Blob?
I don't think there is any real comparative similarity between the defeats of "two universalist ideologies".
One, communism, was manifest in a world full of hostile and powerful enemies, enemies both ideological and material.
Neoliberalism, in contrast, was a straightforward evolutionary development of a hegemonic ideology manifest in already powerful, materially dominant regions of the globe.
The “real comparative similarity” you question is totalitarianism. Both neoliberalism and communism are totalitarian. They’re both hegemony today inside the U.S. with one being left and the other being right.
Neoliberalism was never an economic theory designed to improve efficiency. It remains a socio-economic schema designed to breakdown institutional and democratic frameworks to permit corporate (and corporate elites) state capture. It was successful.
US think tanks employed a whole of society attack on liberalism, social justice validity, the state as anything but a corporate construct. Corporate state captured was achieved by but not limited to
(i) redefining Christian religion as a reflection of a corporate controlled society by removing the validity of community, pious liberalism, concern for the other as a characteristic of Christ in the NT, to OT justification of hierarchies, elites, removal of women and minorities from voice, social rigidity/anti social mobility [Gini expansion.]
(ii) atomisation of Anglophone populations creating the helpless, indeed, hapless individual (without education what can you do?) against corporate power, i.e the individual is good, the sole driver of economic growth. Community is bad as groups have the power to defeat corporatism and are therefore falsely defined as Marxist/Socialist.
(iii) self-serving control of the legislature - note how in the 70's & '80's it was the individual consumer v's the corporation in the courts, David versus Goliath. Until class action itself became a corporate means for profit whereby via politicalisation the larger corporations sought legislation to ensure arbitration. Corporate malfeasance, even if proven, doesn't manifest in large scale monetary compensation.
(iv) Conceptions of the rightful individual as framed by RW corporate narratives. The purchased gun as a symbol for the WHOLE of the US Constitution with the Second Amendment. For example this conception fails all logic and ethical tests when the right to life applied solely to embryos yet not to thousands of deceased and maimed school children as gun victims. MSM is a RW, corporate construct serving itself and other corporations with a shared understanding of societal control not just of the political landscape but the formation of public opinion, and worse, the nature of self-understanding. Nationalism as God, Country/Flag, Guns, Family justified atomism of the American people. Racism as a weaponised self-justification for failure to achieve the American Dream - 'twas always someone else's fault. Yet for the American middle class racism was not hate as it was for the bottom two deciles, rather an instituted fear. Fear of competing job loss, lowering house prices, one's daughter lost, married to one...
(v) When economic decline caused by corporate America no longer offered economic growth, blame for that outcome required corporate America to transfix the very means of resolution as the enemy. 'Woke.' Compassion, empathy, equality, equity, social mobilisation, social justice, the worthless majority over the God elect minority, could be blamed for economic stagnation. Where community, (formerly) normative values ability to resolve the fix of corporate economic stagnation were denigrated by elites. Mancur Olson's dictum of 'if no growth, take a larger slice of the pie' has become the second stage of corporate state capture. Hence, tariff introduction. 13.4% of US GDP is via imports, worth ~$4.4 trillion are the last corporate grab. Immobilisation of society, to make sure they were unable to threaten corporate control entailed appropriation of Federal treasury receipts. 50% income tax and anywhere above 16% social security and medical taxes meant the American people paid a minimum 64% (to 84%) of Federal treasury receipts. Corporate taxation a mere 6%-9%. Who appropriated the Federal treasury, school teachers with tax allowances on a few dollars for teaching aids out of their own pocket or elites private jet aircraft? The result is 2/3 of Americans have become a rentier society. 64% can't find $500 in an emergency. [Pew.] 640,000 bankrupted by medical bills alone, millions more who lose retirement savings, their vehicle, their house. Hence Project 25 is the means of continuation: to prevent any social regeneration.
Since the Thatcher/Reagan nexus in the early 80's corporations and their elites, taking firm control of RW (and eventually Middle to Left of centre) political parties and MSM, attained corporate state capture, to appropriate the Federal treasury for themselves, control employment conditions, the economic environment. Ordoliberalism, its operation as a check, pfft. In the face of growing Chinese market share, innovation, and state level competition, corporate America and then the larger Occident corporations gave up competing, to undertake short term distributive spending on themselves rather than invest in, and compete against an economy that was an order of magnitude larger. Perhaps that is the definition of corporate rationalism? It was ever thus that the 20th Century was not anything to do with American exceptionalism, it was merely the advantages of relative economies of scale.
> Finally, mendacity. The failure to observe, especially in international relations, even the self-defined and self-acclaimed “rules-based global order”, and the tendency to use these rules selectively—that is, to follow the old-fashioned policies of national interest without acknowledging it, created among many the perception of double standards
I would very much like to hear more about this. There are obvious examples, like Iraq, but I don’t think most Westerners, including myself, know of examples where the “universal” rules of the Washington consensus were in fact bent to favour the hegemonic players. Yet I suspect many such examples exist.
Branko occasionally has a good point or two in his idiosyncratic views, but this piece is total nonsense. Milton Friedman, Margaret Thatcher, and their ilk linked to the “rebellious generation of the 60s”? The Washington Consensus – the Bible of neoliberalism – “is fundamentally sound and has much to recommend itself”? Both points are absurd to anyone with an ounce of critical perspective. But even more so, the whole premise of Branko’s blog is false: neoliberalism has not at all been defeated, in theory or in practice. It is the reigning ideology underlying the PRSP (Poverty Reduction and Strategy Paper/Process) of the World Bank and the IMF whose policy recommendations globally continue to be the Washington Consensus neoliberal playbook!
Well, the link between ex-hippies and neoliberalism is not new, the connection goes through individualism and rejection of stately regulated society. In a BBC documentary by a left-leaning director Adam Curtis, the story of neoliberal revolution starts with Patty Smith in New York of mid-1970s.
This is more nonsense. You can find specious links between anything but the "rebellious generation of the 60s" believed in the need for collective action to transform society not laissez-faire market fundamentalism.
I was also puzzled about the theory that connects Patty Smith and Thatcher, but if I think again: Bill Clinton could generally be connected to both poles.
Neoliberalism, contrary to Branko, has been a global scourge! Connecting neolibralism to the wonderful countercuture of the 60s is ridiculous and a few individual connections don't make it so. Why do Branko and others try so hard to give some critical legitamacy to the so-called Washington Consensus which has upended the lives of billions of people around the globe and continues to do so?!
Funny how it seems that everyone in the comments section has their own understanding of neoliberalism. For me, it was most akin to ideology. However, ideology or not, in economics it was transformed into something that looked like a scripture or perhaps “a cookbook” with recipes for eternal progress. E.g. Washington Consensus: privatize, deregulate, minimize the role of the state, remove barriers to trade (not the movement of people, though), let the markets flourish, etc. Well, in many cases, it did not work in reality. The question is why! And this is where Branko, who has seen it with his own eyes in many countries, is right: local conditions. Only a fairy could turn a pumpkin into a glorious coach (but only for a few hours). Neoliberalism ignores history and time needed to build robust “initial” conditions.
Talking about 'neoliberalism' like Marxism makes little sense.
Marxism is the doctrine that originates in Karl Marx's writing. It's an ideology.
Neoliberalism is a catch all for politicians are varying as Margaret Thatcher, Barack Obama and more. Who are the writers of neoliberalism? Hayek? Krugman? Fukayama?
There is no 'book of neoliberalism'.
There are people who are pro-market, there are people who are for the welfare state, there are people who are for both in varying degrees. As for the international doctrines of 'neoliberalism' it's pretty clear there isn't really anything putting forward a doctrine there.
Democratic welfare states with a market economy is the way most of the way the west governs itself. But is that an ideology or something that just evolved over decades ?
Yes, excellent point. Furthermore, since there is no single foundational text of neoliberalism, no Neoliberal Manifesto, its "universalism" is not the same as the Communist universalism. Communist dogma strictly seeks Worldwide Revolution, and abolishment of the nation-state. As Branko often points out, USSR, is the only country without a geographic reference in its name. That was the design, eventually the whole world was supposed to merge into the USSR.
The expansionist nature of neoliberalism was a lot more random. Mostly it was offered as a development pathway for countries in crisis, i.e. Easter Europe and others, but it wasn't enforced at a gunpoint.
Of course there were some overzealous practitioners, after the end of the Cold War, who wanted to push it down on societies that never asked for it, like Iraq for example, but these examples were few, disastrous, and were generally abandoned. Not sure how much this was ideology-driven, or simply officials in high places (i.e. US State Department), who have devoted their lives on defending against Communist ideological aggression, and who felt like their life would be empty if they didn't continue... But there was never top-down ideological neoliberal dogma.
Ultimately, if it has failed, it was a trivial "victim of its success" paradigm, where over-adherence, and reductio ad absurdum of the basic ideas leads to a crash into the complexity of the real world.
The West has failed in that it has not managed to help development in Africa. The major development success globally is China which has done it in an authoritarian way.
Internally Western States are now starting to fail in the traditional way that states fail, they are going insolvent. But that is primarily due to the intersection of Democracy and the Welfare State.
But still, as you say, the West is a victim of it's own success. Around the world people still want to move to the West.
Failure of ideology doesn't mean it goes away. Ideology, even if it's realized to be a failure, continues to linger due to inertia and lack of an alternative.
Politicians looks for convenient models and structures for governance. The commandments of Neoliberalism were simple and governments adopted it as basis of economic management. Economy is too complex to be governed by simplistic models and rigid commandments. Economic management requires deep thinking, experimentation, intellectual insight etc which most politicians don't have in popular democracy. Politicians of popular democracies are not philosophers, they are clowns who're busy cultivating popular whims in electorate to win elections. Trump is the extreme case.
I agree with many points made in the piece but the claim that things are “refuted by reality” always strikes me as ideological. Note that neoliberals themselves very often used such phrases to denigrate the postwar Keynesian consensus or the USSR. Of course models and political structures change but “reality” is far too broad and ambiguous as an explanation.
I think Deng’s point was that being rich is nothing to be ashamed of or embarrassed about. Not that being rich implies some moral superiority. I am sure you agree, and if so, perhaps you might be more careful about quoting Deng as an example of glorifying wealth in a moral sense.
Interesting piece, as usual. I am looking forward to the book. Still, I disagree with you on the origins of neo-liberalism that started with Hayek, Mises and Friedman, and not the “rebellious 1960s generation”. That generation was mildly Keynesian in its macroeconomic management, but shunned the master by fully adopting hyper-globalisation and totally ignoring domestic inequality and the social segments they were supposed to protect. They ended up endorsing neoliberalism because they were the victims of the mainstream economic theory, which is built around the false notion that real markets are nearly perfect and around the idea that Samuelson’s neo-classical synthesis always ensures domestic full employment, a necessary condition for the ideal results of free trade. They were all sons of Samuelson, not of Tarshis, let alone Lerner or Myrdal. They even protested against honest Samuelson when in 2004 he wrote the paper “Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization. (Journal of Economic Perspectives, 18(3), 135–146). He famously concluded that “Being able to produce more efficiently in China can indeed reduce the real wages of some or even all workers in the United States” and asked in vain for active structural adjustment :” You need more temporary protection for the losers … My belief is that every good cause is worth some inefficiency.”
The reality of our economies is composed of imperfect markets, monopolistic competition, or oligopolies, rather than something akin to General Equilibrium Theory, the so-called Welfare Theorems, and Pareto optima. Economists are aware of this, but their educated instinct is to first approach any economic problem within the context of perfectly competitive markets. Consider, for example, the imposition of marginal cost pricing on public utilities in natural monopolies. Politically, the “reluctant neoliberals” ignored the reality of nations and democratic majority rule, as the theory focuses on individuals, firms, and markets. Their implicit ideal was a world made of one global market, supposed to work sufficiently close to a perfect market. They ignored the 1997 warning by Dani Rodrik (Has globalization gone too far?) or what he later (2011) called the paradox of hyper-globalization, that democracy, national sovereignty, and hyper-globalization are mutually incompatible. The best Western ideals of liberalism and social democracy fell victim to pure ideology that always goes to self-defeating extremes. Authoritarian Populism, protectionism, geoeconomics as statecraft, are now the extreme vengeance of history that we have to endure..
The Washington Consensus was also defeated by reality. When the poor countries tried to behave like the rich they became even poorer. Only countries that did the opposite – i.e. tried to "govern the markets" (the title of Robert Wade's book about Taiwan) – they succeeded reasonably.
And, by the way, even when the rich countries tried to act according to the Washington Consensus, they became poorer. Europe and the US look quite miserable compared to China.
"...ideologically and generationally linked to the rebellious generation of the 1960s..."?! Do Hayek, the Mont Pelerin Society, the devotees of Reagan and Thatcher, the Chicago School, Powell of the Powell Memorandum and the many free-market fundamentalist economists who have dominated the profession since the 50s and their ilk fall into this category? Or are you referring to Yuppies, Sloane Rangers, ex-hippies and all those types who transitioned from the streets of 68, and the Red Brigades, to become hard-line Atlanticists, business executives and members of the PMC and the Blob?
I don't think there is any real comparative similarity between the defeats of "two universalist ideologies".
One, communism, was manifest in a world full of hostile and powerful enemies, enemies both ideological and material.
Neoliberalism, in contrast, was a straightforward evolutionary development of a hegemonic ideology manifest in already powerful, materially dominant regions of the globe.
The “real comparative similarity” you question is totalitarianism. Both neoliberalism and communism are totalitarian. They’re both hegemony today inside the U.S. with one being left and the other being right.
Neoliberalism was never an economic theory designed to improve efficiency. It remains a socio-economic schema designed to breakdown institutional and democratic frameworks to permit corporate (and corporate elites) state capture. It was successful.
US think tanks employed a whole of society attack on liberalism, social justice validity, the state as anything but a corporate construct. Corporate state captured was achieved by but not limited to
(i) redefining Christian religion as a reflection of a corporate controlled society by removing the validity of community, pious liberalism, concern for the other as a characteristic of Christ in the NT, to OT justification of hierarchies, elites, removal of women and minorities from voice, social rigidity/anti social mobility [Gini expansion.]
(ii) atomisation of Anglophone populations creating the helpless, indeed, hapless individual (without education what can you do?) against corporate power, i.e the individual is good, the sole driver of economic growth. Community is bad as groups have the power to defeat corporatism and are therefore falsely defined as Marxist/Socialist.
(iii) self-serving control of the legislature - note how in the 70's & '80's it was the individual consumer v's the corporation in the courts, David versus Goliath. Until class action itself became a corporate means for profit whereby via politicalisation the larger corporations sought legislation to ensure arbitration. Corporate malfeasance, even if proven, doesn't manifest in large scale monetary compensation.
(iv) Conceptions of the rightful individual as framed by RW corporate narratives. The purchased gun as a symbol for the WHOLE of the US Constitution with the Second Amendment. For example this conception fails all logic and ethical tests when the right to life applied solely to embryos yet not to thousands of deceased and maimed school children as gun victims. MSM is a RW, corporate construct serving itself and other corporations with a shared understanding of societal control not just of the political landscape but the formation of public opinion, and worse, the nature of self-understanding. Nationalism as God, Country/Flag, Guns, Family justified atomism of the American people. Racism as a weaponised self-justification for failure to achieve the American Dream - 'twas always someone else's fault. Yet for the American middle class racism was not hate as it was for the bottom two deciles, rather an instituted fear. Fear of competing job loss, lowering house prices, one's daughter lost, married to one...
(v) When economic decline caused by corporate America no longer offered economic growth, blame for that outcome required corporate America to transfix the very means of resolution as the enemy. 'Woke.' Compassion, empathy, equality, equity, social mobilisation, social justice, the worthless majority over the God elect minority, could be blamed for economic stagnation. Where community, (formerly) normative values ability to resolve the fix of corporate economic stagnation were denigrated by elites. Mancur Olson's dictum of 'if no growth, take a larger slice of the pie' has become the second stage of corporate state capture. Hence, tariff introduction. 13.4% of US GDP is via imports, worth ~$4.4 trillion are the last corporate grab. Immobilisation of society, to make sure they were unable to threaten corporate control entailed appropriation of Federal treasury receipts. 50% income tax and anywhere above 16% social security and medical taxes meant the American people paid a minimum 64% (to 84%) of Federal treasury receipts. Corporate taxation a mere 6%-9%. Who appropriated the Federal treasury, school teachers with tax allowances on a few dollars for teaching aids out of their own pocket or elites private jet aircraft? The result is 2/3 of Americans have become a rentier society. 64% can't find $500 in an emergency. [Pew.] 640,000 bankrupted by medical bills alone, millions more who lose retirement savings, their vehicle, their house. Hence Project 25 is the means of continuation: to prevent any social regeneration.
Since the Thatcher/Reagan nexus in the early 80's corporations and their elites, taking firm control of RW (and eventually Middle to Left of centre) political parties and MSM, attained corporate state capture, to appropriate the Federal treasury for themselves, control employment conditions, the economic environment. Ordoliberalism, its operation as a check, pfft. In the face of growing Chinese market share, innovation, and state level competition, corporate America and then the larger Occident corporations gave up competing, to undertake short term distributive spending on themselves rather than invest in, and compete against an economy that was an order of magnitude larger. Perhaps that is the definition of corporate rationalism? It was ever thus that the 20th Century was not anything to do with American exceptionalism, it was merely the advantages of relative economies of scale.
> Finally, mendacity. The failure to observe, especially in international relations, even the self-defined and self-acclaimed “rules-based global order”, and the tendency to use these rules selectively—that is, to follow the old-fashioned policies of national interest without acknowledging it, created among many the perception of double standards
I would very much like to hear more about this. There are obvious examples, like Iraq, but I don’t think most Westerners, including myself, know of examples where the “universal” rules of the Washington consensus were in fact bent to favour the hegemonic players. Yet I suspect many such examples exist.
«the “universal” rules of the Washington consensus were in fact bent to favour the hegemonic players. Yet I suspect many such examples exist.»
The "free world" in 1990-1991 fought a war to restore to power an absolute monarchy, "for democracy" of course.
Branko occasionally has a good point or two in his idiosyncratic views, but this piece is total nonsense. Milton Friedman, Margaret Thatcher, and their ilk linked to the “rebellious generation of the 60s”? The Washington Consensus – the Bible of neoliberalism – “is fundamentally sound and has much to recommend itself”? Both points are absurd to anyone with an ounce of critical perspective. But even more so, the whole premise of Branko’s blog is false: neoliberalism has not at all been defeated, in theory or in practice. It is the reigning ideology underlying the PRSP (Poverty Reduction and Strategy Paper/Process) of the World Bank and the IMF whose policy recommendations globally continue to be the Washington Consensus neoliberal playbook!
Well, the link between ex-hippies and neoliberalism is not new, the connection goes through individualism and rejection of stately regulated society. In a BBC documentary by a left-leaning director Adam Curtis, the story of neoliberal revolution starts with Patty Smith in New York of mid-1970s.
This is more nonsense. You can find specious links between anything but the "rebellious generation of the 60s" believed in the need for collective action to transform society not laissez-faire market fundamentalism.
I was also puzzled about the theory that connects Patty Smith and Thatcher, but if I think again: Bill Clinton could generally be connected to both poles.
People change.
Neoliberalism, contrary to Branko, has been a global scourge! Connecting neolibralism to the wonderful countercuture of the 60s is ridiculous and a few individual connections don't make it so. Why do Branko and others try so hard to give some critical legitamacy to the so-called Washington Consensus which has upended the lives of billions of people around the globe and continues to do so?!
Neoliberalism was never an ideology, just a new face of good old Western imperialism. Lipstick on a pig.🫤
Funny how it seems that everyone in the comments section has their own understanding of neoliberalism. For me, it was most akin to ideology. However, ideology or not, in economics it was transformed into something that looked like a scripture or perhaps “a cookbook” with recipes for eternal progress. E.g. Washington Consensus: privatize, deregulate, minimize the role of the state, remove barriers to trade (not the movement of people, though), let the markets flourish, etc. Well, in many cases, it did not work in reality. The question is why! And this is where Branko, who has seen it with his own eyes in many countries, is right: local conditions. Only a fairy could turn a pumpkin into a glorious coach (but only for a few hours). Neoliberalism ignores history and time needed to build robust “initial” conditions.
Branko, brilliant as usual. Much confusion in the comments.
Talking about 'neoliberalism' like Marxism makes little sense.
Marxism is the doctrine that originates in Karl Marx's writing. It's an ideology.
Neoliberalism is a catch all for politicians are varying as Margaret Thatcher, Barack Obama and more. Who are the writers of neoliberalism? Hayek? Krugman? Fukayama?
There is no 'book of neoliberalism'.
There are people who are pro-market, there are people who are for the welfare state, there are people who are for both in varying degrees. As for the international doctrines of 'neoliberalism' it's pretty clear there isn't really anything putting forward a doctrine there.
Democratic welfare states with a market economy is the way most of the way the west governs itself. But is that an ideology or something that just evolved over decades ?
Yes, excellent point. Furthermore, since there is no single foundational text of neoliberalism, no Neoliberal Manifesto, its "universalism" is not the same as the Communist universalism. Communist dogma strictly seeks Worldwide Revolution, and abolishment of the nation-state. As Branko often points out, USSR, is the only country without a geographic reference in its name. That was the design, eventually the whole world was supposed to merge into the USSR.
The expansionist nature of neoliberalism was a lot more random. Mostly it was offered as a development pathway for countries in crisis, i.e. Easter Europe and others, but it wasn't enforced at a gunpoint.
Of course there were some overzealous practitioners, after the end of the Cold War, who wanted to push it down on societies that never asked for it, like Iraq for example, but these examples were few, disastrous, and were generally abandoned. Not sure how much this was ideology-driven, or simply officials in high places (i.e. US State Department), who have devoted their lives on defending against Communist ideological aggression, and who felt like their life would be empty if they didn't continue... But there was never top-down ideological neoliberal dogma.
Ultimately, if it has failed, it was a trivial "victim of its success" paradigm, where over-adherence, and reductio ad absurdum of the basic ideas leads to a crash into the complexity of the real world.
Yep.
The West has failed in that it has not managed to help development in Africa. The major development success globally is China which has done it in an authoritarian way.
Internally Western States are now starting to fail in the traditional way that states fail, they are going insolvent. But that is primarily due to the intersection of Democracy and the Welfare State.
But still, as you say, the West is a victim of it's own success. Around the world people still want to move to the West.
Substantive, opening defintions the author will use for liberalism and neoliberalism would have helped me sift through this abstract's contentions.
Failure of ideology doesn't mean it goes away. Ideology, even if it's realized to be a failure, continues to linger due to inertia and lack of an alternative.
Politicians looks for convenient models and structures for governance. The commandments of Neoliberalism were simple and governments adopted it as basis of economic management. Economy is too complex to be governed by simplistic models and rigid commandments. Economic management requires deep thinking, experimentation, intellectual insight etc which most politicians don't have in popular democracy. Politicians of popular democracies are not philosophers, they are clowns who're busy cultivating popular whims in electorate to win elections. Trump is the extreme case.
Neo liberalism might have been adopted by Western baby boomers but it was never their project since Hayek, Friedman and Nixon clearly weren’t boomers.
I agree with many points made in the piece but the claim that things are “refuted by reality” always strikes me as ideological. Note that neoliberals themselves very often used such phrases to denigrate the postwar Keynesian consensus or the USSR. Of course models and political structures change but “reality” is far too broad and ambiguous as an explanation.
I think Deng’s point was that being rich is nothing to be ashamed of or embarrassed about. Not that being rich implies some moral superiority. I am sure you agree, and if so, perhaps you might be more careful about quoting Deng as an example of glorifying wealth in a moral sense.
Interesting piece, as usual. I am looking forward to the book. Still, I disagree with you on the origins of neo-liberalism that started with Hayek, Mises and Friedman, and not the “rebellious 1960s generation”. That generation was mildly Keynesian in its macroeconomic management, but shunned the master by fully adopting hyper-globalisation and totally ignoring domestic inequality and the social segments they were supposed to protect. They ended up endorsing neoliberalism because they were the victims of the mainstream economic theory, which is built around the false notion that real markets are nearly perfect and around the idea that Samuelson’s neo-classical synthesis always ensures domestic full employment, a necessary condition for the ideal results of free trade. They were all sons of Samuelson, not of Tarshis, let alone Lerner or Myrdal. They even protested against honest Samuelson when in 2004 he wrote the paper “Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization. (Journal of Economic Perspectives, 18(3), 135–146). He famously concluded that “Being able to produce more efficiently in China can indeed reduce the real wages of some or even all workers in the United States” and asked in vain for active structural adjustment :” You need more temporary protection for the losers … My belief is that every good cause is worth some inefficiency.”
The reality of our economies is composed of imperfect markets, monopolistic competition, or oligopolies, rather than something akin to General Equilibrium Theory, the so-called Welfare Theorems, and Pareto optima. Economists are aware of this, but their educated instinct is to first approach any economic problem within the context of perfectly competitive markets. Consider, for example, the imposition of marginal cost pricing on public utilities in natural monopolies. Politically, the “reluctant neoliberals” ignored the reality of nations and democratic majority rule, as the theory focuses on individuals, firms, and markets. Their implicit ideal was a world made of one global market, supposed to work sufficiently close to a perfect market. They ignored the 1997 warning by Dani Rodrik (Has globalization gone too far?) or what he later (2011) called the paradox of hyper-globalization, that democracy, national sovereignty, and hyper-globalization are mutually incompatible. The best Western ideals of liberalism and social democracy fell victim to pure ideology that always goes to self-defeating extremes. Authoritarian Populism, protectionism, geoeconomics as statecraft, are now the extreme vengeance of history that we have to endure..
vconstancio.substack.com
The Washington Consensus was also defeated by reality. When the poor countries tried to behave like the rich they became even poorer. Only countries that did the opposite – i.e. tried to "govern the markets" (the title of Robert Wade's book about Taiwan) – they succeeded reasonably.
And, by the way, even when the rich countries tried to act according to the Washington Consensus, they became poorer. Europe and the US look quite miserable compared to China.