NeoLiberalism and the Counter-Enlightenment
Michael Hudson May 27, 2010
The Counter-Enlightenment, its Economic Program – and the Classical Alternative
The last few years have seen Social Democratic and Labour parties fall into disarray throughout the world. Retreating from the economic program that powered their electoral takeoff a century ago, they have lost their traditional constituencies. Their golden age was an outgrowth of classical political economy from Adam Smith via John Stuart Mill to Progressive Era reformers advocating progressive taxation of land and other wealth, public infrastructure investment at subsidized prices, price regulation of monopolies, and public banking reforms to socialize the financial system.
Industrial protectionists, nationalists and neocolonialists – the parties of heavy industry and military power – also endorsed a strong role for government. Across the political spectrum the wave of the future appeared to be a rising role for public oversight of markets, subsidies for capital formation and education, public health, social welfare and infrastructure spending. This program was most successful in the United States, Germany and Central Europe.
The guiding assumption of democratic political reform was that voters – with the working class most numerous – would act in their own interest to legislate tax and regulatory reforms aimed at raising productivity and living standards while making their economies more competitive in world markets. Banks and other financial institutions were expected to play a key role, in conjunction with government policy (and indeed, a military industrial buildup).
The question of who would be the major beneficiaries of pro-industrial economic reforms depended on who would control the government to administer tax policy and subsidies, tariff policy, social spending and infrastructure investment. more