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After the demise of neoliberalism but not of conservatism, a third developmentalism?

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  • Pereira, Luiz C. Bresser
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    Neoliberalism and developmentalism are the two alternative forms of economic and political organization of capitalism. Since the 2008 global financial crisis we see the demise of neoliberalism in rich countries, as state intervention and regulation increased, opening room for a third historical developmentalism (the first was mercantilism, the second, Fordism). Not only because of major market failures, not only because the market is definitely unable to assure financial stability and full employment, an active macroeconomic policy is being required. Modern economies are divided into a competitive and a non-competitive sector; for the coordination of the competitive sector the market is irreplaceable and regulation as well as strategic industrial policy will be pragmatically adopted following the subsidiarity principle, whereas for the non-competitive sector, state coordination and some state ownership are usually more efficient. Besides, the fact that capitalist economies are increasingly diversified and complex is an argument against the two extremes – against statism as well as neoliberalism – in so far that they require market coordination combined with increased regulation. But the third developmentalism probably will not be progressive as was the second, because the social-democratic political parties are disoriented. They won the battle for the welfare state, which neoliberalism was unable to dismantle, but the competition of low wage developing countries and immigration continue to offer arguments to conservative political parties that defend the reduction of the cost of labor contracts or the or precarization of labor.

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    Paper provided by FGV/EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil) in its series Textos para discussão with number 394.

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    Date of creation: 23 Jul 2015
    Handle: RePEc:fgv:eesptd:394
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    1. Robert Delorme, 2010. "Deep Complexity and the Social Sciences," Books, Edward Elgar Publishing, number 13888.
    2. Sheila C. Dow, 1996. "The Methodology of Macroeconomic Thought," Books, Edward Elgar Publishing, number 933.
    3. Streeck, Wolfgang, 2011. "The crisis in context democratic capitalism and its contradictions," MPIfG Discussion Paper 11/15, Max Planck Institute for the Study of Societies.
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