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New Left Review 113, September-October 2018


david kotz

END OF THE NEOLIBERAL ERA?

Crisis and Restructuring in American Capitalism

During the severe economic crisis of 2008–09, it seemed to many that neoliberalism was finished. [1] Baris Guven provided valuable research assistance for the project that gave rise to this article. The major us banks were facing collapse and survived only through state bailouts. Economic activity plummeted, along with employment. According to conventional wisdom, none of this was supposed to be happening: free-market capitalism would be eternally stable, bringing an end to the era of state intervention in the economy. Everyone would swim or sink on the basis of their own efforts and abilities. These claims were belied by what then unfolded in clear view of the whole world. When the crisis that couldn’t happen broke out, the us Treasury and Federal Reserve swiftly jettisoned their free-market dogma and used all the mechanisms at their disposal to halt the collapse. Internationally, the major capitalist states of the G20 followed suit with fiscal-stimulus programmes, while their central banks flooded the economy with money and drove interest rates to near zero. Wags noted, ‘In a crisis, we are all Keynesians.’ There was an expectation in the air of looming change in institutions and policies, although working people were expected to rely on their own devices as Washington concentrated on saving bankers and giant corporations, while homeowners facing foreclosure got little help.

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