Limits of Policy Intervention in a World of Neoliberal Mechanism Designs: Paradoxes of the Global Crisis
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.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hyman P. Minsky, 1998.
"Uncertainty and the Institutional Structure of Capitalist Economies,"
- Hyman P. Minsky, 1996. "Uncertainty and the Institutional Structure of Capitalist Economies," Economics Working Paper Archive wp_155, Levy Economics Institute.
- repec:cup:cbooks:9780521017039 is not listed on IDEAS
- DeLong J. Bradford, 2011. "Economics in Crisis," The Economists' Voice, De Gruyter, vol. 8(2), pages 1-2, May.
- J. Bradford DeLong & Lawrence H. Summers, 1992. "Equipment Investment and Economic Growth: How Strong Is the Nexus?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 157-212.
- Gary Dymski, 2011. "The International Debt Crisis," Chapters, in: The Handbook of Globalisation, Second Edition, chapter 6 Edward Elgar.
- Roger B. Myerson, 2008.
"Perspectives on Mechanism Design in Economic Theory,"
American Economic Review,
American Economic Association, vol. 98(3), pages 586-603, June.
- Myerson, Roger B., 2007. "Perspectives on Mechanism Design in Economic Theory," Nobel Prize in Economics documents 2007-6, Nobel Prize Committee.
- Gary Clyde Hufbauer & Jeffrey J. Schott, 2005. "NAFTA Revisited: Achievements and Challenges," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 332, December.
- 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.
- J. Bradford DeLong & Lawrence H. Summers, 1988. "How Does Macroeconomic Policy Affect Output?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(2), pages 433-494.
- Andrei Shleifer ad Robert W. Vishny, 1995.
"The Limits of Arbitrage,"
Harvard Institute of Economic Research Working Papers
1725, Harvard - Institute of Economic Research.
- Robert A. Blecker, 2003. "The North American Economies After NAFTA : A Critical Appraisal," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 33(3), pages 5-27, September.
- repec:fth:harver:1418 is not listed on IDEAS
- Varoufakis, Yanis, 2011. "The Global Minotaur," University of Chicago Press Economics Books, University of Chicago Press, number 9781780320151, December.
When requesting a correction, please mention this item's handle: RePEc:voj:journl:v:58:y:2011:i:3:p:285-308. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ivana Horvat)The email address of this maintainer does not seem to be valid anymore. Please ask Ivana Horvat to update the entry or send us the correct address
If references are entirely missing, you can add them using this form.