As a possible or probable recession looms, neoliberalism evades challenge. Yet again.

The narrative has changed. It is no longer about a long “expansion” (not so much when you count externalized costs,[1] but, you know, that would require the rich to pay for what they steal so we can’t count those) as it is about multiple causes for worry and whether or not we are in fact already in a recession.[2]

Contrary to the ludicrous but conventional introductory economics assumption,[3] it should be utterly uncontroversial that economic cycles and the market indices are as much about psychology as they are anything about economic or financial data.[4] The fear of recession alone can and will produce recession. Which probably means that, absent some really good news in the very near term, we will be in a recession, if we are not already in one.

Notably, Donald Trump will take much of the blame with his trade war with China,[5] mainly because his policy contradicts neoliberal orthodoxy, not because there are in fact multiple causes for worry.[6] That won’t help his re-election prospects.[7]

A recession will likely bolster the neoliberal mainstream of the Democratic Party, which will scream from the highest rooftops, “We told you so!” Never mind that this will make the third recession (the first two of which have been severe) during my eighteen years of unemployment and is therefore unpersuasive as economic policy even if you ignore that it is already utterly discredited intellectually.[8]

Which would be true to form. Somehow neoliberalism always manages to escape serious challenge.[9] Mainly, I suspect, because the elites who benefit from neoliberalism can just wait it out.

  1. [1]Riane Eisler, The Real Wealth of Nations: Creating a Caring Economics (San Francisco: Berrett-Koehler, 2007).
  2. [2]Jon Hilsenrath, “After Record-Long Expansion, Here’s What Could Knock the Economy Off Course,” Wall Street Journal, June 3, 2019, https://www.wsj.com/articles/after-record-long-expansion-heres-what-could-knock-the-economy-off-course-11559591043; John Kemp, “Global economy is probably in recession,” Reuters, August 7, 2019, https://www.reuters.com/article/uk-global-economy-kemp/column-global-economy-is-probably-in-recession-idUKKCN1UX1OF; Colin Kruger, “‘Insane levels’: Can a world where profitless companies are flying last?” Sydney Morning Herald, August 10, 2019, https://www.smh.com.au/business/companies/insane-levels-can-a-world-where-profitless-companies-are-flying-last-20190808-p52f3d.html; Damian Paletta, Thomas Heath, and Taylor Telford, “Stocks tank as another recession warning surfaces,” Washington Post, August 14, 2019, https://www.washingtonpost.com/business/2019/08/14/stocks-tank-another-recession-warning-surfaces/; Tim Wallace, “‘Very real’ recession risk as economy contracts for first time in seven years,” Telegraph, August 9, 2019, https://www.telegraph.co.uk/business/2019/08/09/recession-risk-now-real-economy-contracts-first-time-seven-years/; Tim Wallace, “World economy faces a risk that’s far bigger than Trump’s trade war,” Sydney Morning Herald, August 9, 2019, https://www.smh.com.au/business/the-economy/world-economy-faces-a-risk-that-s-far-bigger-than-trump-s-trade-war-20190809-p52ffs.html
  3. [3]N. Gregory Mankiw, Principles of Economics, 6th ed. (South Melbourne, Victoria, Australia: Cengage, 2012).
  4. [4]Daniel Stedman Jones, Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics (Princeton, NJ: Princeton University, 2012); Jennifer Schuessler, “In History Departments, It’s Up With Capitalism,” New York Times, April 6, 2013, http://www.nytimes.com/2013/04/07/education/in-history-departments-its-up-with-capitalism.html
  5. [5]Stephen Bartholomeusz, “Trump is escalating a trade war he isn’t winning,” Sydney Morning Herald, August 5, 2019, https://www.smh.com.au/business/the-economy/trump-is-escalating-a-trade-war-he-isn-t-winning-20190805-p52dxf.html; Aaron Blake, “How a recession could doom Trump’s 2020 reelection,” Washington Post, August 12, 2019, https://www.washingtonpost.com/politics/2019/08/12/how-recession-could-doom-trumps-reelection/; John Kemp, “Global economy is probably in recession,” Reuters, August 7, 2019, https://www.reuters.com/article/uk-global-economy-kemp/column-global-economy-is-probably-in-recession-idUKKCN1UX1OF
  6. [6]Jon Hilsenrath, “After Record-Long Expansion, Here’s What Could Knock the Economy Off Course,” Wall Street Journal, June 3, 2019, https://www.wsj.com/articles/after-record-long-expansion-heres-what-could-knock-the-economy-off-course-11559591043; John Kemp, “Global economy is probably in recession,” Reuters, August 7, 2019, https://www.reuters.com/article/uk-global-economy-kemp/column-global-economy-is-probably-in-recession-idUKKCN1UX1OF; Colin Kruger, “‘Insane levels’: Can a world where profitless companies are flying last?” Sydney Morning Herald, August 10, 2019, https://www.smh.com.au/business/companies/insane-levels-can-a-world-where-profitless-companies-are-flying-last-20190808-p52f3d.html; Tim Wallace, “‘Very real’ recession risk as economy contracts for first time in seven years,” Telegraph, August 9, 2019, https://www.telegraph.co.uk/business/2019/08/09/recession-risk-now-real-economy-contracts-first-time-seven-years/; Tim Wallace, “World economy faces a risk that’s far bigger than Trump’s trade war,” Sydney Morning Herald, August 9, 2019, https://www.smh.com.au/business/the-economy/world-economy-faces-a-risk-that-s-far-bigger-than-trump-s-trade-war-20190809-p52ffs.html
  7. [7]Aaron Blake, “How a recession could doom Trump’s 2020 reelection,” Washington Post, August 12, 2019, https://www.washingtonpost.com/politics/2019/08/12/how-recession-could-doom-trumps-reelection/
  8. [8]Mark Blyth, Austerity: The History of a Dangerous Idea (Oxford, UK: Oxford University, 2013); Jason Hickel, “Progress and its discontents,” New Internationalist, August 7, 2019, https://newint.org/features/2019/07/01/long-read-progress-and-its-discontents; Daniel Stedman Jones, Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics (Princeton, NJ: Princeton University, 2012); Robert Kuttner, “Austerity never works: Deficit hawks are amoral — and wrong,” Salon, May 5, 2013, http://www.salon.com/2013/05/05/austerity_never_works_deficit_hawks_are_amoral_and_wrong/; Dennis Loo, Globalization and the Demolition of Society (Glendale, CA: Larkmead, 2011); Thomas Piketty, Jeffrey Sachs, Heiner Flassbeck, Dani Rodrik and Simon Wren-Lewis, “Austerity Has Failed: An Open Letter From Thomas Piketty to Angela Merkel,” Nation, July 6, 2015, http://www.thenation.com/article/austerity-has-failed-an-open-letter-from-thomas-piketty-to-angela-merkel/; John Quiggin, “Austerity Has Been Tested, and It Failed,” Chronicle of Higher Education, May 20, 2013, http://chronicle.com/article/Austerity-Has-Been-Tested-and/139255/; David Stuckler and Sanjay Basu, “How Austerity Kills,” New York Times, May 12, 2013, http://www.nytimes.com/2013/05/13/opinion/how-austerity-kills.html; David Stuckler and Sanjay Basu, “Paul Krugman’s right: Austerity kills,” Salon, May 19, 2013, http://www.salon.com/2013/05/19/paul_krugmans_right_austerity_kills/
  9. [9]Mark Blyth, Austerity: The History of a Dangerous Idea (Oxford, UK: Oxford University, 2013).

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