Wednesday, 27 April 2016

Has neoliberal capitalism had its day?

In Developed economies are not suffering from the consequences of a financial crash, but from a structural crisis of neoliberal capitalism, an extract from his book, David M. Kotz writes that the current global economic slowdown in developed economies is due to a structural crisis of the "neoliberal form of capitalism".
What explains the current malaise in developed economies across the world? In my book, The Rise and Fall of Neoliberal Capitalism, I analyse the roots of the economic crisis that began in 2008 and the free-market, or ‘neoliberal’, form of capitalism from which the crisis emerged. I argue that the stubborn stagnation afflicting many of the developed economies cannot be understood simply as the fallout of a severe financial crash or as an unusually severe ‘Great Recession’, but instead is a structural crisis of the neoliberal form of capitalism. This means that the continuing stagnation cannot be resolved by policy measures alone within the constraints of neoliberal capitalism. Rather, a resolution requires major institutional restructuring.
I argue that both theoretical considerations and historical precedents indicate that the neoliberal form of capitalism can no longer give rise to sustained economic growth. The stagnation will put increasing pressure on all the affected groups in society to find an alternative route to resuming normal economic growth. I suggest that a return to a statist economy is the likely outcome, although that can take different forms, ranging from a right-wing nationalist version to a new round of social democracy or even a shift away from capitalism toward socialism. While the neoliberal form of capitalism is unlikely to survive, which statist form will replace it cannot be predicted in advance and will depend on the outcome of economic and political battles among various groups and classes in the coming years.