Gary Gerstle’s history of contemporary economics is an outstanding work. It offers a structure to remember and criticize recent economic history and also suggests pertinent questions for consideration. Gerstle’s summary of liberalism begins with classic liberalism of the 18th Century based on the analysis of Adam Smith. This is followed by Keynesian liberalism, dominated and led by Franklin D. Roosevelt and his New Deal. Next came neo-liberalism. In our opinion, in all phases of liberalism, imperialism is denoted.
Classic liberalism, which promoted a free market economy based on profit, resulted in poverty for millions. Slavery continued from the previous order of mercantilism. Lady Wilde’s poem as follows described the potato famine where cash crops were sent overseas while the Irish starved:
Weary men, what reap ye?
—Golden corn for the stranger.What sow ye?
—Human corpses that wait for the avenger.
Fainting forms, hunger‐stricken, what see you in the offing?
Stately ships to bear our food away, amid the stranger's scoffing.
There's a proud array of soldiers—what do they round your door?
They guard our masters' granaries from the thin hands of the poor.
Pale mothers, wherefore weeping?
—Would to God that we were dead
Our children swoon before us, and we cannot give them bread.
The Famine Year: poem by Lady Jane Wilde, The Penguin Book of Irish Verse, Penguin Books, 1970.
Each epoch delineated by Gerstle is precluded by a movement and
then established as an order.
Classic liberalism was based on free trade. It
replaced the economic order of mercantilism.
Free trade meant an elimination of tariffs and minimal government
intervention in business.
According to Gerstle, free market liberalism collapsed with the
Great Depression. The answer was found in
the theories of J. M. Keynes who showed the need for purchasing power by
consumers.
Keynes’ theory highlighted the then-considered factors of
production, land, labor, and capital, and added consumers to the list. For consumers to have purchasing power,
government needed to intervene.
This was a successful policy, but collapsed with the depression of
the thirties. C. H. Douglas also had
some ideas at the time of Keynes, but Keynes’ ideas were selected. Douglas claimed that his program of credits
would eliminate economic fluctuations and would negate war as a means to
establish needed markets. His system
would eliminate overproduction and unemployment. Douglas died before World War II; he saw it
coming and died as a very sad man.
The following is Frank Zeidler’s poem describing the alienated worker in the Roosevelt era.
I have not thought much of what it must be like to be struck by some of the weapons us munitions workers make. I really don’t think there is going to be a big war anyway, and even if there is, we might as well enjoy ourselves right now.
“I Am the Munitions-Maker. And I Am.” Poem by Frank Zeidler, former Milwaukee Socialist mayor published by Milwaukee Public Library, Milwaukee, Wisconsin. 2002.
Roosevelt’s New Deal provided jobs and wages for workers, but also war. Japanese citizens were rounded up and imprisoned and also some Italian and German families were imprisoned. Economic hegemony replaced military control. Roosevelt’s success made him very and he ran and was elected to a fourth term. Martin Kennelly, an Irish immigrant, despite family pressure, voted for Dewey in 1944 because he was afraid of Roosevelt being established as a King. Roosevelt’s New Deal liberalism lasted until the 70’s when complaints about high taxes, inflation, and government interference in business opened a new path for another liberalism, neo-liberalism.
Neo-liberalism had a long history of
formation. A key moment in its history
was the Bretton Woods, New Hampshire Conference in 1944. Delegates from the major capitalist countries
on the verge of the World War II victory, suggested a new economic order of
minimal control by government for a free market economy. Financial rules were set up controlled by the
International Monetary Fund (IMF) and the World Bank.
Both U.S. political parties supported this initiative. Rules were set for a global economy. The term, globalization of the economy, was used. The system was called neo-liberalism to distinguish it from classic liberalism, the classic liberalism of Adam Smith and the liberalism of Franklin D. Roosevelt.
The collapse came rather quickly.
Poverty hit the main laboratory of the experiment in Chile. The advocates of the Chicago school of
Friedman economics were wrong.
Free trade meant the movement of manufacturing from the United
States to Latin American countries seeking low wages.
Gary Gerstle does not note a major breaking point. The Zapatista armed challenge in Mexico the
opening day of the North American Free Trade Agreement in 1994 indicated
serious trouble for neo-liberalism.
Donald Trump challenged neo-liberalism in his first term. Gary Gerstle has yet to comment on his second
term which has taken a wrecking ball to the neo-liberal system. Trump’s policy of America First destroys world economic liberalism and promotes a new
imperialism led by the U.S.
Gerstle does not foresee an economic order that would supplant
Trump’s new version of imperialism.
Wouldn’t it be different if the factors that move the world economic
system would adjust free market capitalism to serve the common good, as
determined by the people, and would respect the sacredness of the earth?
The Rise and Fall of Neo-Liberal Order: America and the world in the free market era by Gary Gerstle, Oxford University Press, 2022
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