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The Market Turn: From Social Democracy to Market Liberalism

Avner Offer ()

No _149, Oxford Economic and Social History Working Papers from University of Oxford, Department of Economics

Abstract: Social democracy and market liberalism offered different solutions to the same problem: how to provide for life-cycle dependency. Social democracy makes lateral transfers from producers to dependents by means of progressive taxation. Market liberalism uses financial markets to transfer financial entitlement over time. Social democracy came up against the limits of public expenditure in the 1970s. The ‘market turn’ from social democracy to market liberalism was enabled by easy credit in the 1980s. Much of this was absorbed into homeownership, which attracted majorities of households (and voters) in the developed world. Early movers did well, but easy credit eventually drove house prices beyond the reach of younger cohorts. Debt service diminished effective demand, which instigated financial instability. Both social democracy and market liberalism are in crisis.

Keywords: Welfare state; housing; credit and debt (search for similar items in EconPapers)
JEL-codes: H55 E51 R21 R31 (search for similar items in EconPapers)
Date: 2017-01-09
New Economics Papers: this item is included in nep-his, nep-knm and nep-mac
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