The Neoliberal Pea and Thimble Trick: Changing Rhetoric of Neoliberal Champions across Two Periods of Economic History and Two Hypotheses about Why the Message Is Less Sanguine

Abstract

Neoliberalism, or faith in the capacity of markets to solve social and economic problems, is a key element of the prevailing public policy orthodoxy in G20 countries. Throughout the 1980s, key proponents of the Neoliberal message such as UK Prime Minister Margaret Thatcher and American President Ronald Regan spoke optimistically about the philosophy’s inevitability and its benefits. During that period, the metaphor of a “rising tide lifting all boats” was offered as a way of envisaging the natural consequence of a supply-side strategy deployed with little or no state intervention. This project examines the shifting neoliberal message through two epochs: the closing decade of the industrial age from approximately 1980 to the early 1990s; and the period of the post-industrial age of e-commerce and the Internet. These eras can be viewed as steps along a path of diminishing comparative commercial advantage for G20 countries relative to emerging economies in Asia, and Latin America. Insofar as neoliberalism is concerned, early proponents of the ideology have realized their objective of reduced state involvement in Western countries but generally have not been able to produce evidence that a “rising tide lifts all boats”. Against this background, the modern G20 neoliberal message has changed from being one of optimism, opportunity and growing advantage to being one of survival. This paper explores why the message has changed and offers two interpretations of the relevance of a less bullish view of the advantages of neoliberalism.