Politics, ideology, and the economy

It is often said that economic policy has taken a sharp turn to the right over the last forty years. This paper argues that this view is inaccurate: economic regulation spending on social welfare programs have both increased. However, there has been a shift from directly government intervention to the use of market mechanisms. In this sense, policy can be said to have moved in a ‘neoliberal’ direction. The chapter examines the economic record of four nations which have moved most strongly in that direction (Australia, Britain, New Zealand, and the United States) and finds that they have improved their performance with respect to economic growth and employment, but also have had rapid growth in inequality. The chapter discusses some reasons that neoliberal policies have facilitated the growth of inequality, and the prospects for reversing this growth.