Right-Wing Populism Did Not Kill Neoliberalism

My new piece is out in Jacobin. I argue that neoliberalism is not dead simply because governments now use tariffs, sanctions, subsidies, or industrial policy more openly. The core of neoliberalism was never only about free trade, but the insulation of markets and capital from democratic control. Right-wing populism has changed the rhetoric, but it has largely preserved the underlying neoliberal order. Contemporary right-wing populism should not be mistaken for a clean break with neoliberalism.

Donald Trump's tariffs, sanctions, and attacks on globalization are often presented as a rejection of the old free-market consensus. But the underlying arguments remain deeply neoliberal. The entrepreneur is still the hero (Tech and crypto-bros). Government is legitimate when it protects national business, punishes foreign competitors, or clears obstacles to private accumulation. Tariffs are sold less as a challenge to markets than as a way of restoring a supposedly fair market order against cheating foreigners, bureaucrats, and global elites.

The same point applies more broadly to the new industrial policy, which was never completely abandoned in the United States or Western Europe, one might add. States may subsidize national champions, direct investment, or protect selected sectors. Yet they can still treat profitability, competitiveness, shareholder value, and private returns as the ultimate criteria of success. Protectionism is not, by itself, an alternative to neoliberalism. Nor is a larger state. States have always intervened in markets. The question is whether intervention changes the social hierarchy of power or merely uses public resources to secure a more competitive capitalism.

Read it here.

On the Fiscal-Military State

The fiscal-military state was not simply a state that spent more on war. It was a new institutional form in which taxation, public debt, public banking, naval procurement, bureaucracy, and war-making capacity were joined together. I discuss it in a longer post on substack. I argue that the British case shows how this system became a foundation of capitalist development. Also, ancient Athens shows that public finance and naval power could be constitutive of state formation much earlier, but it lacked the permanent funded debt, central banking, and capitalist financial system that made Britain distinctive.

Jane D’Arista, 1932–2026

 

From the right, at the top and only the back of the head, José Antonio Ocampo, then Robert Blecker, and then Jane. I'm next to her to the left. In 2000, I think

I was saddened to learn of the passing of Jane D’Arista, economist, poet, and one of the most insightful analysts of money, finance, and financial regulation of her generation. Jane died on July 4 at the age of 94.  I had been in contact with her last year about her lovely memoir. Her long career included work as a staff economist for the US House Banking and Commerce Committees, as a principal analyst at the Congressional Budget Office, and later as a teacher and researcher at Boston University, PERI, the University of Utah, and The New School. She authored important work on the evolution of U.S. finance, monetary policy, regulation, and financial crises, including The Evolution of U.S. Finance and All Fall Down.

Her memoir tells the remarkable story of how she became an economic analyst almost by accident. Hired initially to organize the papers of Congressman Wright Patman, she entered the world of banking policy through archives, hearings, investigations, and congressional staff work. From Patman’s populist battles against concentrated financial power, to her work on the Reconstruction Finance Corporation, the Federal Reserve, foreign bank regulation, offshore banking, and the CBO, Jane learned economics from the inside of institutions. That practical knowledge gave her work unusual depth. She understood finance not as an abstract market mechanism, but as a political and institutional structure shaped by law, power, public purpose, and regulation. She famously anticipated the concept of shadow banking in the early 1990s, referring to it as the parallel banking system.

 

Jane between me and Robert Blecker at an event at American University honoring her late husband in 2018

I was fortunate to meet Jane while working for Lance Taylor at The New School. She was incredibly generous with younger economists and a profound source of wisdom. During my time at the University of Utah, she taught briefly, and she later visited the Federal University of Rio de Janeiro, my alma mater, for a conference I co-organized. I am deeply saddened by her passing, but grateful to have had the opportunity to know her.

Jane belonged to a tradition of economists who took institutions seriously, understood the dangers of unregulated finance, and believed that public policy could and should discipline financial power. She will be missed, but her work remains essential reading.

Prices, Quantities, and the Problem of Inflation

A recent exchange on X (Tweeter) pointed to a paper that proposes to separate demand from supply-driven inflation by looking at the relation between prices and quantities. According to the paper, if both rise, inflation is treated as demand-driven (as shown below). If prices rise while quantities fall, it is treated as supply-driven (no figure, but easy to visualize, a shock to Ys, the aggregate supply). The problem is that this does not identify the cause of inflation.

Prices can rise because of higher costs (e.g. energy, imported inputs, etc.) while quantities increase for independent reasons (e.g. increase in government transfers to the unemployed). The economy may be recovering, public spending may be growing, credit may be expanding, or firms may be drawing on unused capacity. In that case, prices and quantities rise together, but it does not follow that demand caused the price increase (old post on why prices and quantities can and should be treated as analytically separate here).

The real issue is capacity. Higher demand becomes inflationary when it encounters binding limits on production. But full capacity is not fixed or directly observable. It depends on the technology, on the availability of labor and inventories, on access to imported inputs, and sector-specific bottlenecks. There are many measures of capacity utilization, non perfect, obviously. Most of my discussion of why the inflationary acceleration of the pandemic was not demand driven is based on looking at different measures of that.

A growing economy can therefore have rising prices and rising output for many different reasons. Cost pressures may push prices up while demand supports expanding production. The sign of price and quantity changes cannot tell us which force caused inflation. The procedure classifies observed co-movements. It does not establish the structural source of inflation. To do that, one must examine costs, mark-ups, distributional conflict, supply disruptions, and the actual conditions of production, not simply whether prices and quantities move in the same direction.