What Get’s the Blame for the Slowing Economy?

There isn’t a doubt that if you walked into any pet shop you’d hear the resident Galah talking about secular stagnation.

The current issue of the flag ship journal of the elite, Foreign Affairs is dedicated to the issue of slow or stagnant, global, economic growth.

Steven Rattner, a leading economics columnist, wrote recently in The New York Times that secular stagnation, for the most part, can be blamed on our political leaders, who have been far too enthralled to fiscal austerity

What’s unusual about today’s raft of challenges is the extent to which governments around the world have added to the problems, rather than ameliorating them. Poor policy choices, like misguided spending priorities and too much austerity…Anti-deficit fervor has led to a meat-ax approach to spending cuts, under which nondefense discretionary outlays (which include key pro-growth areas like research and development and infrastructure) have fallen in real terms by nearly 20 percent over the past five years, at a time when they should be growing substantially…The past two recessions were caused largely by private actors: the risky lending of the mid-2000s and the dot-com bubble at the turn of the century.This time, if we fail to break out of the current stagnation — or worse, fall into global recession — the fault will lie with our leaders

Surely this analysis is too weak. Far better to ask what is to blame rather than who is to blame.

“Our leaders” have pursued fiscal austerity because their dedication to neoliberal ideology and neoclassical economics remains undiminished.  Rattner himself still by and large is committed to this, as can be seen with his prattle about financial market deregulation and economic growth in the very same article.

Even the critique presented here is too simplistic. Neoliberalism largely functions as an ideological fig leaf covering underlying processes occurring in the global economy, what we used to call “globalisation.” It is, to no small degree, globalisation through its competitive race to the bottom dynamic that helps to foster the almost permanent pursuit of fiscal austerity.

Neoliberalism, with all its attendant faults and foibles, will endure, whatever the intellectual credentials of neoclassical theory, so long as those underlying dynamics endure.

Furthermore, so long as the concentration of economic and political power obtains, a concentration facilitated by globalisation, without any countervailing power by social and labour movements mobilising from below, our “leaders” will play the, neoliberal, tune paid by the piper.