Rethinking the purpose of economic policy
Subscribe to enjoy similar stories. 2024 has revealed starkly the insufficiency of 20th century economics to solve problems of runaway climate change, inequitable growth, and the rise of authoritarian governments. Economics became the imperial science for driving public policy in the 20th century.
Social and political turmoil in the West between the two World Wars was fuelled by economic injustice within and among countries. Political movements rose to correct the imbalances—Nazism in Germany, fascism in Italy, communism in Russia. After the Second World War, the Western world became divided between the communist Soviet Union and capitalist US with socialist Europe in the middle.
Keynesian economics provided the foundations for socialist policies and international trade and development institutions. By century end, the Washington ideology of free trade and private enterprises prevailed over socialism, and communism was buried. Economic science in its present state cannot provide solutions for problems it has unwittingly caused.
Benefits of economic growth are not flowing down quickly enough to nourish society equitably. Movements from the Left and the Right are rising to challenge neo-liberal ideology. Liberals are alarmed by the rise of authoritarian governments and demands for local jobs and self-reliance even in the US.
New models of economic growth are required, which do not exploit nature, and improve the distribution of well-being and equitable opportunities for all citizens, not just increase GDP. Problems caused by lopsided economic growth cannot be solved with the same economics that has caused it. Before pressing for more reforms, economists should reconsider some fundamentals for good public policies.
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