Liberal Economics’ Track Record on Inclusion, Sustainability and Resilience

This chapter summarizes the important historical contribution of liberal economics in accelerating economic growth and reducing poverty, while examining its profound and persistent difficulty in responding effectively to societal demands for greater social inclusion, environmental sustainability and resilience to major shifts and shocks. It traces a growing body of evidence and criticism that modern economics may be constitutionally incapable of addressing these considerations adequately, particularly since its theoretical models generally treat them as afterthoughts, matters assumed to resolve naturally over time on the strength of a rising tide of national income generated by economic growth. It then assesses the state of reform in each of these three respects, concluding that efforts to date have been essentially aspirational, procedural or incremental and thus are destined to fall well short of what would be required to fulfil the corresponding goals humanity's political leaders have set in multilateral agreements, such as the Sustainable Development Goals, Paris climate and Kunming-Montreal biodiversity agreement targets, and objectives of the ILO Centenary Declaration for the Future of Work. Despite the widespread call for replacement of “neoliberalism” and the Washington Consensus, a viable theory of more fundamental and sufficient change has yet to emerge from within the economics community. This will require a deeper critique and reformulation of liberal economic doctrine, starting with a re-examination of its first principles.