Neoliberalism: An Entrenched but Exhausted Growth Regime

Abstract

This paper analyzes Neoliberalism in the US economy with a view to identifying the effects of Neoliberalism on macroeconomic performance since 1990, underlying problems with the structure of the Neoliberal economy, and the effects of Neoliberalism on the economic consequences of the COVID-19 pandemic. It is shown that Neoliberalism ‘worked’ from 1990-2007 by combining an ‘incomes policy based on fear’ that permitted non-inflationary growth and low unemployment with a debt-financed, consumption-led demand regime that, as evidenced by the 2007-09 financial crisis and Great recession, was unsustainable. Since 2009 Neoliberalism has proved to be an entrenched but exhausted growth regime, producing only a ‘depressed upswing’ 2009-2019 that was terminated by the onset of the COVID-19 recession –the response to which was neither efficient nor equitable. The paper concludes that at this juncture, the epithet ‘build back better’ must be applied to the entire US economy.

JEL classification: B52 ; E12 ; E31 ; E32 ; E64 ; E66