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The Forum > Article Comments > Neoliberal pseudo-science > Comments

Neoliberal pseudo-science : Comments

By Geoff Davies, published 13/3/2009

Neoliberalism is flawed at its core, its performance was mediocre at best, and its failure was inevitable.

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I believe that the Neoliberal views of "evidence based research" which Dr Nelson invoked to support the national Inquiry into literacy in 2005 can be shown to be just as flawed as their economic theories.
Posted by Cambo, Friday, 13 March 2009 9:31:19 AM
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Geoff, I loved your book "Economia" and this essay is a corker too!
Posted by michael_in_adelaide, Friday, 13 March 2009 9:44:41 AM
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"The core problem with neoliberalism is that there is no justification, in theory or in evidence, for the claim that free markets produce desirable results, let alone optimal results. "

Hmm... what about the 17 years of growth and prosperity that followed the Hawke, Keating and Howard governments? A period where minimum wages grew strongly nearly every year, where inflation was low and unemployment dropped to its natural levels?

This can of course be contrasted with the Whitlam years of low economic growth, out of control inflation and high unemployment.

The author fails to note that progressive policies played just as much a role than so called no-liberal ones: http://www.onlineopinion.com.au/view.asp?article=8242

And here's a total refutation of Rudd's ridiculous essay: http://www.onlineopinion.com.au/view.asp?article=8489
Posted by AJFA, Friday, 13 March 2009 9:51:08 AM
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"The core problem with neoliberalism is that there is no justification, in theory or in evidence, for the claim that free markets produce desirable results, let alone optimal results. "

O.k., say that's true, what're the alternatives? The author mentions "managed markets" a number of times, but what does that actually mean? Is the author advocating a centrally planned economy? How then does the author expect that innovation and "generally moving forwards" will occur?

I think there may only be a few people who think that markets are a perfect solution. However accepting that markets aren't perfect, surely letting people exercise their own capacity to vote with their own dollars is better than a centrally planned economy and an intrusive government?

This is yet another piece where the author is having a whinge. Rather than just whinging, perhaps the author would like to make some policy suggestions on how we should fix things...

Methinks probably not.
Posted by BN, Friday, 13 March 2009 10:20:56 AM
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There are a number of problems with the author’s argument.

The first is that, by refuting the neoliberal school, he has by no means justified his conclusion, which is in essence that free markets are dysfunctional and anti-social and need central management based on coercion.

Secondly, the fundamental idea is that the economic crisis arose out of free financial markets. According to this theory, governmental control of the money supply has got nothing to do with the economics of finance. Government can divert trillions of dollars worth of capital into bribing political favourites to engage in unproductive activity at the expense of the rest of society, and that has no economic effect, or can be presumed to be only beneficial. Government can set up a welter of controls over money – monopoly of minting, legal tender, protecting banks against demands for redemption, required reserves, central banking, deposit guarantees, lowering interest rates, compelling billions of dollars worth of loans to people specifically *because* they can’t pay it back – and all these have no economic effect, or can be presumed to be only beneficial. Government can indulge in a direct conflict of interest as against the rest of society by permanently inflating the currency, and this has no economic effect, or can be presumed to be only beneficial. *If* there had been a free market in any relevant field *then* the author might have got to square one.

Thirdly, even if the author’s premises were valid, which they aren’t, it would not follow that therefore governmental economic management is indicated, because there is no reason to think that government, in its nature, is any more capable of dealing with the original problem of rationalising priorities in resource use considering the different conflicting vested and non-vested interests, and there much reason to think that it’s not.
Posted by Peter Hume, Friday, 13 March 2009 10:37:00 AM
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Governmental intervention is much more likely to exacerbate the original problem that the resources get diverted to a minority priviligentsia, because a) it’s government that is the root cause of that problem in the first place, b) government in its nature consists of nothing else, c) it is a true monopoly, d) it is force-based, and c) it is far far less representative of society’s will than a free market.

The fall-back to Keynesian, Marxian or interventionist positions on the basis of a supposed rebuttal to ‘pseudoscience’, is laughable: http://mises.org/story/3369

And the idea that government presumptively has a reserve of economic and moral super-competence would be laughable if it did not represent the very real danger of the slide into socialism or fascism that we are witnessing throughout the western world: a police state of enforced privilege in the name of ‘economic management’ and ‘social justice’.

Ludwig von Mises has definitively refuted all the arguments put forward by the author in this article, and by Steve Keen, in:
The Theory of Money and Credit 1912
Economic Calculation 1921
Socialism 1924
Human Action 1949

*After* you have understood and refuted the arguments for liberty and against interventionism and *not before*, you will be qualified to comment. Otherwise we just face the same old standard dreary problem that the enemies of liberty do not refute the arguments for liberty, but only satisfy themselves with ignoring or misrepresenting them
Posted by Peter Hume, Friday, 13 March 2009 10:39:18 AM
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