The world’s largest evangelist of neoliberalism, the International Monetary Fund, has admitted that it’s not all it’s cracked up to be.
Neoliberalism refers to capitalism in its purest form. It is an economic philosophy espoused by libertarians — and repeated endlessly by many mainstream economists — one that insists that privatization, deregulation, the opening up of domestic markets to foreign competition, the cutting of government spending, the shrinking of the state and the “freeing of the market” are the keys to a healthy and flourishing economy.
“There are aspects of the neoliberal agenda that have not delivered as expected,” the economists write in “Neoliberalism: Oversold?“, a study published in the June volume of the IMF’s quarterly magazine Finance & Development.
In analyzing two of neoliberalism’s most fundamental policies, austerity and the removing of restrictions on the movement of capital, the IMF researchers say they reached “three disquieting conclusions.”
The importance of this study is hard to overstate. The IMF is essentially admitted that many of the policies that it demanded countries implement for decades only made things worse.
One, neoliberal policies result in “little benefit in growth.”
Two, neoliberal policies increase inequality, which produces further economic harms in a “trade-off” between growth and inequality.
And three, this “increased inequality in turn hurts the level and sustainability of growth.”
The top researchers conclude noting that the “evidence of the economic damage from inequality suggests that policymakers should be more open to redistribution than they are.”
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