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Limits of Policy Intervention in a World of Neoliberal Mechanism Designs: Paradoxes of the Global Crisis

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  • Gary A. Dymski

    ()
    (Department of Economics, University of California, USA)

Abstract

The current global context poses several paradoxes: the recovery from the 2009 recession was not a recovery; investment, normally driven by profit rates, is lagging and not leading economic activity; the crisis is global but debate involves sub-global levels; and public safety-nets, which have helped to stabilize national income, are being cut. These paradoxes can be traced, in part, to the impact of the “truce” that followed the Keynesian-Monetarist controversy on economists’ ideas about policy activism. This implicit “truce” has removed activist macro policy from discussion, and shifted attention toward institutions as mechanisms for solving game-theoretic coordination problems. Policy activism then centers on how the “agents” (nations) can achieve optimal use of their available resources (or optimal access to resources) at the global level; and this involves creating and fine-tuning compacts – neoliberal mechanism designs – that can capture rents and attract globally mobile capital. This approach leads economists to see the key problem in the current global crisis as fixing broken neoliberal mechanisms. However, a global economy dominated by mechanisms that feed on aggregate demand without generating it faces the prospect of stagnation or collapse.

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Bibliographic Info

Article provided by Savez ekonomista Vojvodine, Novi Sad, Serbia in its journal Panoeconomicus.

Volume (Year): 58 (2011)
Issue (Month): 3 (September)
Pages: 285-308

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Handle: RePEc:voj:journl:v:58:y:2011:i:3:p:285-308

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Web page: http://www.panoeconomicus.rs/

Related research

Keywords: Neoliberal mechanism design; Policy activism; Keynesian- Monetarist controversy; Globalization; Capital mobility; Hyman Minsky; Bradford De Long;

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  1. S. Abu Turab Rizvi, 2006. "The Sonnenschein-Mantel-Debreu Results after Thirty Years," History of Political Economy, Duke University Press, vol. 38(5), pages 228-245, Supplemen.
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Cited by:
  1. Phillip Anthony O’Hara, 2014. "Political Economy of Love: Nurturance Gap, Disembedded Economy and Freedom Constraints within Neoliberal Capitalism," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(2), pages 161-192, March.
  2. Pascal Petit, 2013. "France and Germany Nuclear Energy Policies Revisited: A Veblenian Appraisal," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(5), pages 687-698, September.
  3. João Sousa Andrade & António Portugal Duarte, 2014. "Output-gaps in the PIIGS Economies: An Ingredient of a Greek Tragedy," GEMF Working Papers 2014-06, GEMF - Faculdade de Economia, Universidade de Coimbra.
  4. Howard Stein, 2012. "The Neoliberal Policy Paradigm and the Great Recession," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 59(4), pages 421-440, September.

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