Levy lecture 28
The neo-liberal challenge
Neo-liberal reform is the only way to go.
Britain was indeed revived
through combination of privatization, deregulation, weakening of trade unions…
reforms were anything but painless.
Increases in poverty, inequality, also social
problems like crime, drugs, violence.
Friedman: similar view.
Two main predictions:
convergence between different countries, inc US and Europe.
becoming more like US.
convergence between parties of Left and of Right.
Eg Miterrand tried to go his
own Leftist way, but had to backtrack (even in a country where the state had
shown great ability to steer econ).
Turning from theory to practice, a number of center-right parties/govts have been
ideology: they like the idea of need for more markets
electoral interests: neo-liberal reforms associated with increased inequality,
upward redistribution of wealth, ie toward people who vote for parties of the right
(reward one’s constituents)
But still, neo-liberalism hasn’t had much success in Europe outside of Britain.
To free up markets, one needs to project a lot of govt power
against the forces that block de/reregulation eg unions, clubby set-ups between
British case unusual in that Thatcher possessed this power: few/no veto
Most countries 1) have a written constitution, 2) have system of PR and
hence typically coalition govts.
So even if they have an authoritarian personality
like Thatcher, other European leaders may not be able to change things as she did.
Eg Berlusconi very rich and influential in early 1990s; saw himself as similar to
Thatcher or Reagan.
But he was PM in 1994 at head of a 3-party govt.
to reform the WS; ram through cuts in pensions without consulting with TUs or
The unions put 2m protestors out (the largest demos since Mussolini)
a few times, until Berlusconi was forced to withdraw reform because his coalition
partners were nervous; a week later they dumped him anyway.
Public opinion: welfare retrenchment isn’t popular.
It tends to be an exercise in
Public opinion may support reform in the abstract, but as soon
as specific proposals are made a lot of resistance.
In fact, in most European
countries, people don’t even support reform in the abstract.
parties in Europe tend not to be neo-liberals – Christian Democrats instead.
In France, even, the conservatives ran the ultra-interventionist