The “fatal flaw” of neoliberalism, which “denotes a preference for markets over government, economic incentives over cultural norms, and private entrepreneurship over collective action,” is that it simply is “bad economics,” according to a new Guardian article penned by Harvard economist Dani Rodrik.
The one size fits all formula can be overly simplistic but that could be said for any economic philosophy.
“Neoliberalism” Criticisms
Most of Rodrik’s article is thoughtful and nuanced. His primary criticism of “neoliberalism,” is that, “its customary remedies – always more markets, always less government – are in fact a perversion of mainstream economics. Good economists know that the correct answer to any question in economics is: it depends.”
He’s correct. The one size fits all “more markets, less government,” formula for economic policy can in many cases be overly simplistic and will not produce the best outcomes in every socioeconomic context, but that could be said for nearly any economic philosophy and really isn’t incredibly innovative as an argument.
It is, however, worth noting that one of the reasons why many “neoliberals” advocate for less government intervention in the economy is precisely because they don’t trust a centralized state authority to have the proper knowledge to know when it is appropriate to intervene, and to what degree, in the interactions between millions or even billions of consumers and producers.
Much of the rest of the article gives the reader the impression that Rodrik is not being entirely fair to “neoliberalism,” as an economic philosophy. For one, in spite of his rebuking neoliberals for making sweeping economic statements, he himself claims that neoliberalism, “does not even get the economics right… it is bad economics.”
There are a great number of empirical studies that examine how neoliberal reforms affect economic development.
