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View Diary: Fukuyama: Democrats Drank the Neoliberal Kool Aid, Wall Street Seduced Economists (237 comments)

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  •  Definitely agree with you, I was providing (4+ / 0-)
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    ferg, elwior, washunate, FIREeconomy

    a response to Fukuyama's claim that it was Reagan/Thatcher, the movement has always existed in economics.

    Neoliberalism is not an academic theory, it is a very real economic and political movement; using economic arguments to back up what they want to do has been around since the rise of political economy.

    It wasn't Hayek that underlay Nixon's initial attack and Reagan's arguments, but rather Friedman's monetarism (hence the deficits). The additional point that is important that come back with the new classicals (but policy makers never went this far) is the trickle-down theory argument, it is an essential neoclassical argument from before the overturn of Say's Law by Keynes and Kalecki's theory of effective demand.

    No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable (Adam Smith, 1776, I, p. 96).

    by NY brit expat on Tue Dec 21, 2010 at 02:57:32 PM PST

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    •  Nixon being Nixon (2+ / 0-)
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      elwior, NY brit expat

      Point taken, that was Fukuyama's position.

      I've always been of the opinion that Nixon's Shock was more about fiscal mismanagement and fears of the French and German retaliation (gold) then any commitment to economic or political principles. But I think when he wrecked Bretton Woods he inadvertently freed the beast of speculative capital, whose tranquilizing had lead to the Golden Age of capitalism (1950-1973) - an age I fear we can't return to until we have a new Bretton Woods which re-tranquilizes global capital and ends the Virtual Senate.

      And yes, Friedman is by far the more influential though I question whether he would have been for a bank bailout either (can't find anything from him when his policies crashed Chile's economy in 82').

      Amazingly I heard a talking head say "Supply creates it's own demand" the other day. I believe it was Stephen Moore from the WSJ editorial page and Club for Growth. So Say's law lives among a few reactionaries, unfortunately those few have a lot of power.

      The Top 1% and the United States of Inequality

      by FIREeconomy on Tue Dec 21, 2010 at 03:11:27 PM PST

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      •  Bretton woods was going to become (1+ / 0-)
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        redundant anyhow. Tobin also thought the same things (the increase in short-term speculative investment due to the removal of the obstacles created by Bretton Woods) which is why he advocated a transaction tax on the currency market.

        "Supply creates its own demand" wonderful, the original version of Say's/Mill's Law from the classical tradition, not even the savings determine investment version of later arguments ... I am an historian of economic thought, I honestly have never regretted that as I swear they keep on regurgitating the same dribble over and over again just in new forms; really, I just need to see how they are stating the argument in the latest versions, the criticisms of these arguments and policies deriving off of them and historical evidence that they do not work actually is easy to find. I swear sometimes it is though I have strange feelings of deja vu constantly when I listen to economic policy discussions. few people with a lot of power will lead to an incredibly miserable situation for a lot of people

        No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable (Adam Smith, 1776, I, p. 96).

        by NY brit expat on Tue Dec 21, 2010 at 03:26:05 PM PST

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