April 5, 2008
Neo-liberalism has manged to roll back social democracy. By that I don't just mean that Hayek blew the whistle on the fundamental problems of central planning as Nicholas Gruen argues at Club Troppo. Gruen's argument is that Hayek was right about the inadequacies of central planning and the significance of local knowledge.
Neo-liberalism also turned the regulatory world of social democracy on its head. As David Bensman
argues in Dissent
By deregulating financial markets, neo-liberal ideology cast financial institutions as our primary innovators—the principal engines of wealth creation. America returned to the pre-welfare state days when financiers hobbled engineers, when mergers and acquisitions (they were called trusts and monopolies back then) provided the fast track to profits and glory, when conspicuous consumption represented greatness.
‘Financialization’ is the name economists gave to neo-liberalism’s impact on the global economy. The notion that creative financing is central to economic growth has become so embedded in our consciousness that most of us don’t remember that this way of thinking used to be considered risky business.
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