Ricardo was right: unless one can enforce 'productive' behaviour from rentiers, sustainable Growth is not an option -while emerging Asia succeeded, the West and Latin America failed, caught in their 'neo-liberal trap'. A tribute to Geoff Harcourt

José Gabriel Palma

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: The 1980s neo-liberal reforms led the West - both developed and Latin America - to capitulate to rentiers at the worst possible time, given the challenges of rapid technological change and evolving world order. Instead of productive flexibilities (Ã la emerging Asia), they delivered a 'neo-liberal trap' with its Ricardian growth-retarding rentier trilogy: a 'market inequality-augmenting, investment-weakening, and productivity growth-retarding' scenario. What these reforms actually did was to turn loose the 'uncreative-destructiveness' of a rentier-based accumulation by indiscriminately strengthening rentiers' property-rights, which allowed them to build an economy and a political settlement - even an ideology - in their own image. In such distorted markets, technological change and international trade could create market opportunities, but not the necessary 'compulsions' to be taken up. Following Geoff Harcourt's lead, I analyse this returning to 'classical economics'; in my case, to a broad Ricardian perspective on rents and rentiers. Emerging Asia, meanwhile, was able to take these opportunities by redirecting rentiers' income towards socially desirable investment strategies - aimed at 'demand adapt' and 'supply upgrade' their productive strategies. Bretton Woods was a guide. But in the West, as rentiers gained the upper hand, the resulting process of 'rentierisation' - of which financialisation is just one, although leading, aspect - is now proving as toxic for inequality, investment and productivity-growth as it is for our democracy.

Keywords: David Ricardo; Inequality; Investment; Productivity; Rents; Rentiers (search for similar items in EconPapers)
JEL-codes: B00 E02 N10 O47 Q02 (search for similar items in EconPapers)
Date: 2025-08-18
New Economics Papers: this item is included in nep-his
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econ.cam.ac.uk/sites/default/files/pub ... pe-pdfs/cwpe2553.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:2553

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().