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Coronavirus Has Killed Neoliberalism

30 125 213
29.03.2020

It’s obvious that at this point there is no way of assessing the implications of the coronavirus on politics, the economy and society, not globally or domestically. But we can already draw some conclusions while the pandemic is still raging in order to outline ways of managing the crisis as well as allow for a recovery later.

The major implication is the collapse of the neoliberal conservative model as conceived by Margaret Thatcher and Ronald Reagan. This model strove to limit the role of the state as much as possible while expanding the power of the free market. The state, went the claim, impedes the potential for creative growth of market forces, so its authority should be curtailed, letting market forces operate unhindered.

Reagan expressed this radically by saying that the state is not the solution, it’s the problem. Benjamin Netanyahu joined him using a cruder metaphor, describing the public sector as a fat man riding on the back of a thin one, namely, the private sector.

Against the backdrop of this neoconservative ideology, a radical policy was implemented, dismantling the welfare state that had been established in the democratic West.

This included the extensive privatization of public services including in health and education, a shrinking of the safety net for the disadvantaged, and a lifting of regulations on banks and stock exchanges, all for the sake of letting market forces operate freely. This was based on the ideological assumption that free competition, though it causes the occasional crisis, is ultimately capable of providing balance and stability for the benefit of everyone.

This neoconservative ideology ignored the historical context that led to the establishment of the welfare state after World War II. The welfare state, in the way it developed mainly in Britain and the United States and was later embraced by all democratic countries, was a merging of the rising power of organized labor, which followed the expansion of the franchise, with the well-reasoned understanding that the unbridled market economy of the ‘20s and ‘30s led to the 1929 Depression with its political ramifications: growth of the communist parties in the West and the embracing of fascism and Nazism by vast parts of the public. This understanding found its expression, for example, in the theories of British economist John Maynard Keynes and in the New Deal of President Franklin Roosevelt.

The welfare state – the “third way” lying between unfettered capitalism and state-controlled socialism – emerged from a unique blending of responsible social thinking and realpolitik considerations, which tried to prevent a........

© Haaretz