9 June 2016
It’s a long way from 19th. Street Washington D.C. to the City Square, Dundee ; from the headquarters of the IMF to the City Chambers of Dundee City Council.
But the philosophy espoused by the former has inflicted terrible damage on the necessary services provided by the latter.
And now research from within the IMF – “Neoliberalism Oversold ?” has shown that “ the benefits” of the IMF’s philosophy “have not delivered as expected” which “appear to have been overplayed.”
The IMF has championed neoliberalism , a Right-wing belief in shrinking government and its interventionist role in the economy , the curtailment of public services and their outsourcing to the private sector.
This “remedy” was supposed to create the conditions for economic growth, but instead it created the austerity that has afflicted country after country, community after community.
The re-appraisal of the consequences of the policy of austerity leads the IMF researchers to “disquieting conclusions” such as :
“Austerity policies not only generate substantial welfare costs – they also hurt demand – and thus worsen employment and unemployment….”
“Instead of delivering growth, some neoliberal policies have increased inequality…”
“Increased inequality hurts the level and sustainability of growth “
Prior to this recent admission of failure, last year, during the UK General Election campaign, the US Nobel Prize Winner in Economics, Paul Krugman, wrote of how the economic case for austerity had crashed.
“All of the economic research that allegedly supported the austerity push has been discredited, “ he wrote in the "Guardian"
“Widely touted statistical results were, it turned out, based on highly dubious assumptions and procedures – plus a few outright mistakes – and evaporated under closer scrutiny.
“It is rare, in the history of economic thought, for debates to get resolved this decisively. The austerian ideology that dominated elite discourse five years ago has collapsed, to the point where hardly anyone still believes it. Hardly anyone, that is, except the Coalition that still rules Britain – and most of the British media. “
The IMF research offers solutions to the policy that the IMF once firmly espoused
“Policymakers should be more open to redistribution than they are. Of course, apart from redistribution, policies could be designed to mitigate some of the impacts in advance—for instance, through increased spending on education and training, which expands equality of opportunity.”
On the receiving end of austerity has been Dundee City Council with £23 million cuts in its provision of vital services this year.
Spending on education provision in the city has been cut severely by the policy of austerity promoted by the IMF.
Now from that same IMF comes a recommendation of increased spending on education “ to mitigate some of the impacts” of austerity.
“Neoliberalism Oversold” is research published by the IMF , not an official statement of policy.
Nevertheless, it represents more than just a remarkable U-turn.
For the Left, this is a damning judgement on the doctrine of austerity.
On austerity, The Left have been right all along.