Limits of Policy Intervention in a World of Neoliberal Mechanism Designs: Paradoxes of the Global Crisis

Dymski, Gary A.
September 2011
Panoeconomicus;Sep2011, Vol. 58 Issue 3, p285
Academic Journal
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.


Related Articles

  • Recession and Recovery Six Fundamental Errors of the Current Orthodoxy. HIGGS, ROBERT // Independent Review;Winter2010, Vol. 14 Issue 3, p465 

    The article presents a critique of conventional wisdom regarding economic recovery from recessions, in the context of the global financial crisis which began in 2008. It focuses on six major concepts which are characterized as errors. These are said to be largely derived from a vulgarization of...

  • Lessons from previous US recessions and recoveries. Ranchhod, Satish // Reserve Bank of New Zealand Bulletin;Mar2010, Vol. 73 Issue 1, p37 

    The US economy is emerging from a period of significant weakness. This article examines how US economic activity evolved during previous post-WWII recessions and recoveries, and considers what this indicates for the current period. Recoveries following previous US recessions have tended to be...

  • Turning Point. Schuman, Michael; Smith, Adam // Time International (South Pacific Edition);9/14/2009, Vol. 174 Issue 10, p34 

    The article discusses the outlook for economic recovery and the impact of the Global Financial Crisis in 2008-2009 on the world economy. The view of Morgan Stanley Asia's chairman Stephen Roach that the United States' debt and deficits were contributing factors to the financial crisis is...

  • INEQUALITY STOPS GROWTH. RAJAN, RAGHURAM // Prague Post;7/18/2012, Vol. 21 Issue 29, pA4 

    The article argues against the understanding of the causes of the economic crisis to learn how to achieve sustained recovery from Great Recession.

  • THE CONFIDENCE TRICK. Keen, S. // Australasian Accounting Business & Finance Journal;May2009, Vol. 3 Issue 1, p57 

    This article reflects on the role that confidence plays in recovery from a financial crisis. The author reflects on lessons from the past - specifically The Great Crash of 1929 and on the work of economists Keynes and Fisher to apply to our current economic woes. The role of overconfidence in...

  • Global Financial Crisis and International Institutions: Challenges, Opportunities and Change. Lane, Jan-Erik; Maeland, Reinert // Public Organization Review;Mar2011, Vol. 11 Issue 1, p29 

    The global financial crisis is not just another economic downturn. It signals the need for fundamental changes in the management of the global market economy. Certainly, time has come to reshuffle voting rights in the World Bank and International Monetary Fund, recognizing shifts in global...

  • The Great Financial Crisis -- Three Years On. FOSTER, JOHN BELLAMY; MAGDOFF, FRED // Monthly Review: An Independent Socialist Magazine;Oct2010, Vol. 62 Issue 5, p52 

    The article discusses the global financial crisis that began in 2007. Though widely blamed on the subprime mortgage crisis in the United States, the recession is instead seen as the result of long-term structural factors in world capitalism, including declining economic growth rates, rising...

  • The revival -- and the retreat -- of the state? HA-JOON CHANG // Red Pepper Magazine;Apr/May2011, Issue 177, p34 

    The article focuses on the return of Keynianism after the global financial crisis of 2008. Economies affected by the crisis immediately parked their neoliberalism thoughts and shifted their focus back to Keynesian macroeconomic policy, particularly the economies of U.S., Great Britain and...

  • The Keynesian Revival: a Marxian Critique. Wolff, Richard D. // Alternate Routes;2011, Vol. 22, p103 

    The global economic crisis, unfolding since late 2007, has begun to undermine the hegemony of neoclassical economics and neo-liberalism generally, thereby provoking a widespread resurgence of Keynesian economics in various forms. The historical adequacy of Keynesian economics to modify, reverse...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics