Tuesday, March 19, 2013

Let's Make Comparisons

Some weird stuff from a discussion of neoliberalism in the Los Angeles Review Of Books. (I'm not going to get much into the content of neoliberalism itself--the word, like neocon, might have been useful once but is now pointless):

Discussions of neoliberalism, on both the left and the right, suffer from what Paul Krugman and others have called “zombie” ideas. These are economic concepts that have been long discredited, but continue to shamble on. On the right, a central zombie idea is that reduced state regulation of markets leads to sustainable economic growth. If you believe this, then the rise of neoliberalism is a no-brainer. Neoliberalism is simply the economic philosophy that works. But why should anyone believe this? The idea that unleashing free markets then leads to good economic times should never have survived the Great Depression, and should surely be killed for good by the Great Recession and its aftermath.

Meanwhile, a new generation of leftist economists has discovered that their progressive brethren suffer from a zombie idea of their own. Mike Beggs, for example, has recently argued that the Marxist economics many on the left continue to find attractive has a fatal flaw. Marx believed in the labor theory of value, the idea that a commodity’s value is equal to the labor that goes into it. Generations of Marxist thinkers have built on this foundation to form a picture of the way the world’s economy works. Thinkers like David Harvey have used this theory to create a sophisticated explanation of neoliberalism as the natural response of capital to changing conditions. If you subscribe to Harvey’s Marxist theory, then the rise of neoliberalism is, again, a no-brainer. But as Beggs points out, the concept underlying theories like Harvey’s was decisively disproved over a century ago, and no one has ever come up with a persuasive defense.

Pardon me?  Reduced state regulation of markets doesn't lead to growth?  I would think the record pretty consistently shows it does.  Yes, you need some regulation, but generally, free markets are the best, perhaps only, road to prosperity, and freer markets perform better than heavily regulated ones. Why else would countries with a commitment to socialist or quasi-socialist concepts resort to free market reforms when they need better performance?

Of course in a dynamic economy there'll be booms and busts, but does that somehow disprove the efficacy of free markets?  The idea that you can somehow regulate your way into avoiding any serious problems at all is absurd, unless you tamp down on the economy so hard that there's practically no room to operate and almost everyone is poorer. (And let's not even get into what caused the Great Depression and the Great Recession, and what led to how long the bad times lasted when we were able to grow quickly out of other crashes.)

Meanwhile, Marxism fails miserably every time and place it's tried.  The article tries to set up an equivalence between the flaws of the right and left, but the idea there's some balance between those who support "unleashing" free markets on a society and those who have a Marxist perspective is absurd.  It's as if someone says if you watch what you eat and exercise regularly, you'll be healthier, and someone else complains hey, I know people who did that and still got sick.  Meanwhile, the other side is claiming if you cut off your oxygen supply you'll do just fine, even though it hasn't worked well in the past, and the complainer says yeah, that's wrong, too, but let's talk about that first guy again.


Anonymous Anonymous said...

Sounds like someone is falling out of love with Lizzy Caplan and into love with Amity Shlaes . . .

12:15 AM, March 19, 2013  
Blogger LAGuy said...

I got nothing against Amity Shlaes, but I'd pretend to be a socialist if it helped me with Lizzy.

12:30 AM, March 19, 2013  
Anonymous Anonymous said...

I'm starting to believe that the underlying economic philosophy matters little if at all but that what is important is periodic changes in philosophy and policies so as to rattle things up and disperse occlusions of corruption and inefficient resources.

6:04 AM, March 19, 2013  
Anonymous Anonymous said...

Glenn Reynolds talks about that in biological terms, shedding parasites. I'm too lazy to google it (c'mon, help me Kleenex the bastards), but I think someone wrote a book or law review article titled something like "Why Democracy is Like Sex" or some such.

7:37 AM, March 19, 2013  
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10:49 AM, March 19, 2013  
Blogger LAGuy said...

About time.

12:51 PM, March 19, 2013  

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