Why does neoliberalism survive when so many of its promises have failed?<\/p>\n
In this video, I suggest that the answer has nothing to do with economics. It is all about fear.<\/p>\n
Politicians, economists, civil servants and financial market participants know that the economy is not working as they promised. Growth is weak. Public services are under pressure. Investment is inadequate. Living standards have stagnated for many people. Yet the same ideas continue to dominate political debate and economic policy.<\/p>\n
Why?<\/p>\n
That's because admitting that neoliberal economics is wrong would require these people to acknowledge that decades of policies, assumptions, and careers have been built on foundations that do not deliver what was promised. The personal and professional cost of that admission could be enormous for those who have spent their entire working lives defending these ideas.<\/p>\n
I compare this problem with the resistance Galileo faced when he challenged accepted wisdom about the universe. The evidence that he was right was always there. What changed was how people understood it. Once the world accepted a new way of looking at the same facts, entirely new possibilities emerged.<\/p>\n
I argue that something similar may be happening today. Modern monetary theory offers a different way of understanding government spending, taxation, debt and money creation. The facts do not change. What changes is how we interpret them and the possibilities we can then see.<\/p>\n
So is neoliberalism surviving because it works?<\/p>\n
Or is it surviving, when MMT so obviously provides a better explanation of what is happening in the world, because too many powerful people are afraid of what might happen if they admitted there is a better alternative?<\/p>\n