Capital Resurgent: Roots of the Neoliberal Revolution

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The advent of economic neoliberalism in the 1980s triggered a shift in the world economy. In the three decades following World War II, now considered a golden age of capitalism, economic growth was high and income inequality decreasing. But in the mid-1970s this social compact was broken as the world economy entered the stagflation crisis, following a decline in the profitability of capital. This crisis opened a new phase of stagnating growth and wages, and unemployment. Interest rates as well as dividend flows rose, and income inequality widened.

Economists Gérard Duménil and Dominique Lévy show that, despite free market platitudes, neoliberalism was a planned effort by financial interests against the postwar Keynesian compromise. The cluster of neoliberal policies--including privatization, liberalization of world trade, and reduction in state welfare benefits--is an expression of the power of finance in the world economy.

The sequence of events initiated by neoliberalism was not unprecedented. In the late nineteenth century, when economic conditions were similar to those of the 1970s, a structural crisis led to the first financial hegemony culminating in the speculative boom of the late 1920s. The authors argue persuasively for stabilizing the world economy before we run headlong into another economic disaster.

 

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Contents

Introduction
1
CRISIS AND NEOLIBERALISM
5
The Strange Dynamics of Change
7
Economic Crises and Social Orders
11
CRISIS AND UNEMPLOYMENT
19
The Structural Crisis of the 1970s and 1980s
21
Accelerating or Slowing?
29
The Creator of Jobs and the Creator of Unemployment
38
An Epidemic of Financial Crises
86
Globalization under Hegemony
98
Myth or Reality?
110
Does Finance Feed the Economy?
119
Who Benefits from the Crime?
128
THE LESSONS OF HISTORY
141
The 1929 Precedent
168
Capital Mobility and Stock Market Fever
175

Controlling Labor Costs and Reining in the Welfare State
44
Historical Fate?
51
The End of the Crisis?
59
THE LAW OF FINANCE
67
The Interest Rate Shock and the Weight of Dividends
69
Keynesian State Indebtedness and Household Indebtedness
78
HISTORY ON THE MARCH
195
The Dynamics of Capital
205
Appendix A Other Studies by the Authors
214
Notes
223
Index
238
Copyright

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About the author (2004)

Gérard Duménil is a Director of Research at the Centre National de la Recherche Scientifique, Paris.

Gérard Duménil is a Director of Research at the Centre National de la Recherche Scientifique, Paris.

Dominique LĂ©vy is a Director of Research at the Centre National de la Recherche Scientifique, Paris.

Dominique Lévy is a Director of Research at the Centre National de la Recherche Scientifique, Paris.

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