Neoliberalism can't work … but you're probably wrong about why

About this video

• Video Title: Neoliberalism can't work … but you're probably wrong about why
• Channel: Reading is a Skill
• Speakers: Magpie
• Duration: 00:13:34

Overview

This video explains the speaker's perspective on why neoliberalism fails, arguing that the common leftist critique is incomplete. The speaker traces the evolution of liberalism, defines neoliberalism, and contrasts it with earlier forms. The core argument is that neoliberalism's failure stems from a complex, multi-layered system of policy implementation involving academics, politicians, and bureaucrats, leading to a diffusion of responsibility and unintended consequences.

Key takeaways

• Evolution of Liberalism: Liberalism is presented in three phases: philosophical, classical (laissez-faire free markets), and social liberalism (using a strong state to address market failures). Neoliberalism emerged as an attempt to address market failures with minimal risk of government failures.
• Leftist Critique vs. Speaker's View: The common leftist critique suggests neoliberalism is simply a return to deregulation and classical liberalism. The speaker argues that neoliberalism's failures are unique, stemming from its complex implementation rather than just deregulation.
• Wallerstein's Definition of Capitalism: Capitalism, as defined by Wallerstein, is the accumulation of capital for its own sake, which can lead to undervaluing companies that provide actual value and overvaluing those focused on perpetual growth.
• "Too Big to Fail" Example: The repeal of regulations on bank sizes under the Bush administration is cited as an example where deregulation allowed inefficient, large companies to grow, externalizing costs, a failure attributed to the type of regulation removed.
• Neoliberalism's Novel Failure Mode: The speaker identifies the primary failure of neoliberalism in its reliance on three layers of expertise (academics, politicians, bureaucrats) for complex, nuanced policies. This diffusion of responsibility makes it difficult to pinpoint the cause of failure, allowing for policies that can have opposite effects of their intentions.
• Patent Reform Example: Obama's shift from "first to invent" to "first to file" in patent law is presented as an example of policy change benefiting large corporations (stakeholders) at the expense of small inventors, illustrating how political adjustments can invert policy goals.
• Diffusion of Responsibility: The system creates perverse incentives where individuals and institutions (corporations, nonprofits, universities) prioritize short-term gains or ease of operation over intended policy outcomes, leading to a lack of clear accountability.

Magpie defines the three phases of liberalism as:

• Philosophical liberalism: This is the foundational stage.
• Classical liberalism: This phase is characterized by a focus on laissez-faire free markets, similar in many ways to modern libertarianism.
• Social liberalism: This phase arose in response to the perceived failures of classical liberalism, advocating for a strong state to address market failures and undesirable market outcomes. In Europe, this evolved into social democracy, and in the US, it included movements like the Progressives and the New Deal Democrats.

Magpie defines neoliberalism as an attempt to address the market failures identified in earlier forms of liberalism while also acknowledging the problems of government failures that arose from strong states. The goal was to narrowly tailor government policies to fix market failures with minimal risk of creating new government failures. This involved a complex system relying on academics, politicians, and bureaucrats to implement nuanced policies.