Liz Truss' historical failure gives a final blow to neoliberalism.
A new era is dawning after Liz Truss resigned and Trussonomics failed.
If you think of the UK, you automatically think of custard, sausages for breakfast, red buses, the Rolling Stones, or Brexit. The UK is also the birthplace of capitalism and (neo)liberalism. As Liz Tuss leaves office, we take another step toward a post-neoliberal society.
Because yes, Liz Truss resigns after six terrible weeks in office. From the start, she had been under fire for her economic and financial policies and judgments. This all culminated in recent days, resulting in an inevitable resignation. In no less than 45 days, Truss completely wrecked the whole idea of the free-market economy, perhaps forever, with a failed fiscal experiment on top.
Iron Lady 2.0
In the country where the neoliberal ideas of a market fundamentalist like Friedrich Hayek took root, with Prime Minister Margareth Thatcher as the standard-bearer, this is all the more striking. Trickle down, the free market, and an orthodox view on a budget: this was the economic newspeak for a long time.
Truss thought of herself as a new Thatcher. The Iron Lady 2.0. She thought she would turn British politics and economics upside down. But she miscalculated profoundly. She went from Iron Lady to a political maybe in just a few weeks: that will be Liz Truss's enduring legacy. And in those few weeks, Truss toppled the ideological and political economy project that had captivated the conservative right since World War II.
She invariably went for a society of low taxes and deregulation for the wealthy, focusing on an unbridled free market with a government only for support. The rich were given free rein and only got more prosperous — if she had succeeded.
The many Oxfam reports on wealth inequality of the last years don't tell any lies, nor do the academic work of Thomas Piketty, Amartya Sen, or Esther Duflo. This was not a way to go—especially given the ongoing energy crisis and rising inflation.
New economic paradigm
The situation we find ourselves in today looks like the 1970s. We had the oil crisis and switched from a Keynesian to a new economic model in which supply-side economics became more important. This macro-economics theory gave market fundamentalism free rein. We would become freer as human beings, they told us.
Liz Truss and her finance minister Kwasi Kwarteng thought of repeating this scenario. Truss thought her conservative recipes from the 20th century would address current problems of the 21st century. But nope, 'computer says no.' Kwasi Kwarteng lost his job last week. Yesterday, it was then up to Truss. The theory of trickle-down economics has been proven wrong. The idea that giving a lot to the lucky ones at the top will automatically trickle down is economic claptrap.
This ultra-Thatcherism or economic libertarianism celebrated its heyday in the 1980s. Donald Trump did it again at the beginning of his term by giving the ultra-rich a hefty tax cut. No, we have not improved financially as a result. And that's the least you can say about that.
Post-Trussonomics
Political economists like Friedrich Hayek and Milton Friedman ensured that these ideas found wide acceptance in the public debate. Thatcher, Ronald Raegan, and other politicians after them consolidated this market thinking politically and further dismantled the welfare state.
The government was allowed to support the market and had to serve the market. And as for the rest, it was not supposed to get too involved. These Trussonnomics are the death knell of the neoliberal and market fundamentalist project. We live in difficult times, war, and economic and financial instability. Stability is needed.
The question arises: what or who then constitutes the alternative? Either muddle with a conservative prime minister, like Jeremy Hunt, Ben Wallace, or Rishi Sunak. Even Boris Johnson is back in the running. Or, as the opponents of that market fundamentalism pointed out back in the 1940s and 50s: authentic socialism. And no, before many, a conservative table jumper starts again: not Soviet communism.
Like in the forties and fifties, utopian socialism is needed. One that is considerate, caring, and guided by social justice. The question is whether Labour leader Keir Starmer is the correct figure to pull British politics out of the doldrums and win over the masses. Time will tell.
Original: https://www.sampol.be/2022/10/is-met-liz-truss-het-neoliberale-project-dood-en-begraven
