Neo-liberalism’s dead end street blues

The legal scholar Frank van Dun has written an insightful essay in Libertarian Papers about the unfortunate identification of liberalism with utilitarian-pragmatic policy making. His analysis is helpful for explaining why some liberal ideas became popular and others remained ignored.  Van Dun touches upon the heart of the matter when he writes that politicians like

Margaret Thatcher in the U.K. and Ronald Reagan in the U.S.A., adopted the free-market rhetoric to gain power on the promise of renewed economic growth.

In the late 1970s the effects of the post-war interventionist policies had become unpopular with so many people that selective use of classical-liberal rhetoric could actually benefit a person running for power. This is not to say that  these politicians did not actually believe in these ideas, but that some liberal modification of the prevailing social democratic orthodoxy  had simply become necessary  in order to prevent modern western countries joining the third world in terms of productivity and welfare.

Selling policy illusions to the government proved a lucrative business for the neo-liberals. Chastened by the experience of stagflation, governments and the interests that thrived on their support were willing to try new ways of maintaining their positions and achieving their objectives that were supposedly more effective and more efficient than the failed Keynesian policies….From the point of view of the ruling politicians, the neo-liberals were excellent team players, always ready to make the existing system more efficient, never eager to question its raison d’être or its self-assigned legal privileges and immunities.

The new neo-liberal opinion makers and the orthodox establishment remained united in their teleological interpretation of “the economy” as a tool to achieve specific policy outcomes.  The objective of a depoliticized society that is at the heart of classical liberalism was ignored in favor of specific public policy proposals to stimulate “growth.” It should not be surprising, then, that the pendulum of history would be swinging back to the older ideas  again when the monetarist orthodoxy would be deemed inadequate to explain and address contemporary economic events.

In every dead end street there is a point where one can only go from left to right and back and then right again, and so on and on. It is hardly helpful to call this the inevitable swing of the pendulum of history. It is going round in circles. The obvious solution is to recognize that the street is a dead end street and to abandon the illusions one had when entering it. Until the utilitarian-pragmatic cult loses its grip on education, the media, and the economics profession in particular, politics, but little else, will continue to thrive on the illusion that it can control the uncontrollable. Not equipped with the divine attribute of prescience, no government can predict, let alone determine, how over time multitudes of other people will react to its policies, exploit the opportunities they create and learn to avoid their burdens.

The problem with political  consequentialism is not that it does not necessarily lead to libertarian conclusions but that every single policy can be justified in a consequentialist framework, depending on the values of the public policy maker in question.  There are no consequences that “speak for themselves.” This does not mean that critics of political consequentialism agree on what should take its place. Natural rights philosophy does not offer better prospects. Attributing any kind of goal to society, whether it is maximization of a social welfare function or enforcement of natural rights, prevents careful thinking about human interaction.

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