The Rise and, Hopefully, the Fall of Economic Neo-Liberalism in Theory and Practice

By Harcourt, G. C. | The Economic and Labour Relations Review : ELRR, December 2009 | Go to article overview

The Rise and, Hopefully, the Fall of Economic Neo-Liberalism in Theory and Practice


Harcourt, G. C., The Economic and Labour Relations Review : ELRR


I count it a great privilege to contribute the opening essay to this issue of The Economic and Labour Relations Review, which is celebrating its first 20 years. Over that time, the journal has been an outlet for independent and outspoken, often unfashionable views, upholding traditions steeped in the thoughts of Michal Kalecki and Maynard Keynes, and some of Australia's wisest economists. (Even Karl Marx gets a mention.) I am most grateful to the editors for asking me to be their opening bat.

Since the 1970s, we have seen the rise to dominance in theory and policy of what Joan Robinson (1964) aptly dubbed 'Pre-Keynesian theory after Keynes'. In the economics profession, these phenomena have been especially associated with the writings of Milton Friedman, Friedrich von Hayek and Robert Lucas, Jnr. They have spawned many surrogates in the USA, the UK, Continental Europe, Latin America, parts of Asia and, sadly, in the Antipodes as well. In the political sphere, President Reagan, Mrs. (as she then was) Thatcher and, in Australia, first, Bill Hayden and then Malcolm Fraser were instrumental in implementing monetarist policies and, more widely, backing deregulation of financial markets, freely floating exchange rates, lowering tariff barriers, and the removal of domestic and international capital controls. Nor did Bob Hawke, Paul Keating and their successors in the ALP avoid the virus. An era of international capitalism, red in tooth and claw, was ushered in. Ruthless swashbuckling capitalists (industrial, commercial and financial) combined with cowed and quiescent workforces often arising from labour markets euphemistically described as flexible, came increasingly to dominate economic and social life.

Commitment to full employment was downgraded or dropped altogether. (I have mentioned before the infamous meeting at Melbourne University in the late 1970s of eight or so Australian professors of economics, called by the late Heinz Arndt, in order to do just this in Australia.) On the surface, control of inflation through monetary policy became the dominant policy. Worship of the free market as the institution for all seasons and activities became the modern equivalent of the Golden Calf; Moses, the Law and the prophets (read Keynes and Kalecki) were argued to be discredited; they were despised or, at best, neglected.

Why did all this happen? There are many interrelated causes and events, intellectual, political and social. At the level of theory, a major factor in my view was the tragedy that post-war generations of students of economics, especially in the USA, were brought up on Paul Samuelson's (and Alvin Hansen's) textbook versions of Keynesian economics instead of on Lorie Tarshis's textbook, The Elements of Economics. An Introduction to the Theory of Price and Employment (1947).

Lorie's book was the first in the USA to contain an account of the economics of Keynes: about 250 pages which were true to Keynes's lectures when Keynes was writing The General Theory (Lorie, then an affiliated student at Trinity College, Cambridge, attended these lectures of Keynes in the early to mid-1930s). Lorie's account was true also to The General Theory itself. In particular, the central core of Keynes's analysis was presented in terms of Keynes's aggregate demand and supply analysis.

Lorie's book was cruelly done (almost) to death by right-wing forces led by Merwin K. Hart and, later, William Buckley, Jnr. so that many departments that had initially proposed to set it as the text got cold feet and reneged. (1) While the first edition of Samuelson's textbook (1948) still received the tail end of the right-wing backlash, it did not prevent his textbook from dominating economics courses for the next 30 years and more.

Had Lorie's book been the base on which the teaching of Keynes's ideas was erected, the stagflation episode of the 1970s could not have been said to have discredited Keynes's system. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The Rise and, Hopefully, the Fall of Economic Neo-Liberalism in Theory and Practice
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.