On the impossibility of neoliberal success: a response to Michael Jacobs

Abby Innes

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In After Neoliberalism Michael Jacobs makes a compelling case for the systematic failures of neoliberal economic policies and in the neoclassical theories that justified them. He calls for an economics rooted in ontological institutionalism and for the (re)development of varied institutions charged with diverse social purposes. This response takes Jacobs’ critique further and states that neoliberalism fails because the neoclassical economics that underpins it is fundamentally utopian; and it is doomed to fail for the same ontological and epistemological reasons that condemned Soviet socialism. What these politically opposed doctrines hold in common is closed-system economic reasoning from axiomatic deduction presented as ‘a governing science’. It follows that both must tend to fail on contact with a three-dimensional reality in an always evolving, open-system world, subject to Knightian uncertainty. The dark historical joke is that a machine models of the economy, both Soviet and neoclassical neoliberal economics, converge on the same statecraft of quantification, output-planning, target-setting, forecasting and the presumption of only ‘rational’—socially productive—firms. The result in both systems is state and economic failure and the creation of production regimes that are a grotesque caricature of those promised, only now in the midst of an ecological emergency. It follows that we need an urgent revival of analytical pluralism in government and a non-utopian scientific realism about the true scope of the ecological crisis, so that Jacobs’ rich institutional ecosystem will have resilient foundations.

Keywords: neoclassical economics; neoliberal policy; polycrisis; Soviet economics; utopia (search for similar items in EconPapers)
JEL-codes: B10 B24 (search for similar items in EconPapers)
Pages: 6 pages
Date: 2024-05-30
New Economics Papers: this item is included in nep-his, nep-hme, nep-hpe and nep-pke
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Published in Political Quarterly, 30, May, 2024. ISSN: 0032-3179

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