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Neoliberalism’s Bailout Problem
Article

Neoliberalism’s Bailout Problem

Mainstream economics ignores the massive government interventions that “free market” capitalism requires.

Robert Pollin and Gerald Epstein
Boston Review, 2021
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8

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Recommendation

Neoliberalism is inherently contradictory, shunning government intervention while relying on it to avert financial market collapses, say economists Robert Pollin and Gerald Epstein in this sharp critique. They cite the bailouts that only lead to more bailouts in what has become an economic doom loop, and they note that these interventions, absent regulation, fail to discipline investors. Too-big-to-fail capitalism needs revamping, the authors contend, and they offer alternatives that will give readers some intriguing food for thought.

Summary

Neoliberalism began driving economic policy around the world in the early 1980s.

Neoliberalism posits that the path to economic prosperity is through unfettered markets that are free from government intervention. In this construct, productivity rises, the quality of life improves and social equity prevails. Economists like Milton Friedman and political leaders such as Margaret Thatcher and Ronald Reagan championed this orthodoxy in the early 1980s. Mainstream economists and officials worldwide have stood behind neoliberal economics ever since.

While many tout neoliberalism as the only way to prosperity, the reality is that large-scale government support has propped it up for decades, including...

About the Authors

Robert Pollin and Gerald Epstein are professors of economics at the University of Massachusetts, Amherst, and they are founding directors of the Political Economy Research Institute.

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