Gliberalism: Keynes and the new classics

At one point I believed this:

The ontology of capitalism which animated the multifarious reform projects was quite distinct from that which underwrites the neoliberal vision. In Keynes’ classic formulation, as set out in the General Theory, capitalist economic systems are best understood by a stable underemployment (of labour and savings) equilibrium. Moreover, such a condition arises endogenously from the normal functioning of capitalist markets. Keynes summarized his ontological stance thus:

In particular, it is an outstanding characteristic of the economic system in which we live that, whilst it is subject to severe fluctuations in respect of output and employment, it is not violently unstable. Indeed it seems capable of remaining in a chronic condition of sub-normal activity for a considerable period without any marked tendency either towards recovery or complete collapse. Moreover, the evidence indicates that full, or even approximately full, employment is of rare and short-lived occurrence (emphasis added, pp. 249-50).

Despite whatever misgiving other reformists might have had with the particular lines of causation (or lack thereof) in Keynes’ model, or with the appropriate target and form of intervention, the ontological conceptualisation of capitalism as system which required persistent state coordination and intervention enjoyed a broad subscription in the postwar epoch.


Now I think I am tempted to believe that the mainstream has not really changed ontological visions.  What has changed is that rational expectations and the NAIRU essentially serve to say: “yes capitalism is characterized by a ‘technical’ underemployment equilibrium but it is optimum and thus is not an underemployment equilibrium.”

So maybe neoliberalism should be called ‘gliberalism’.  Which is way more catchy than ‘unapolgetic apologia.’ 


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