Contours of Descent: U.S. Economic Fractures and the Landscape of Global Austerity, by Robert Pollin. London and New York: Verso. 2003. Cloth, ISBN 1859846734, $21.00. 238 pages.
Bob Pollin's Contours of Descent provides an incisive political-economic analysis of neoliberal economics in the United States. The first part of the book (chapters 1-3) describes the neoliberal economic strategy as exemplified in the "Washington consensus," demonstrates that Clintonomics largely followed the neoliberal program, and then evaluates Clintonomics and its performance (the "hollow boom"). Chapter 4 analyzes Bush-2's economic policy through early 2003; chapter 5 considers the effects of neoliberalism in developing countries; and chapter 6 sets out Pollin's alternative strategy for growth and development.
Pollin defines neoliberal economics as a commitment to unregulated capitalism, small government (except for military spending), free trade and international capital flows, and deregulation of markets, coupled with a lack of concern for inequality, low real wages, and poverty. In the United States, neoliberalism appeared as the Washington Consensus in the 1990s; it was promoted as the only viable approach to economic policy by most policy advisors, the IMF, and Alan Greenspan's Federal Reserve System.
Pollin accepts the argument that capitalist market economies are potentially a good thing--they can lead to an increase in the wealth of nations and a rising standard of living--but demonstrates that they face three fundamental problems, all of which require state intervention: the "Marx problem," the "Keynes problem," and the "Polanyi problem." The Marx problem is the contradiction between full employment, rising wages, and declining profits, investment, and economic growth; if an economy reaches full employment the wage share tends to increase at the expense of the profit share; if profits fall investment falls and the economy slips into recession.
The Keynes problem begins with the same understanding that profits and investment are necessary for full employment and growth; Keynes points out all the many reasons why high investment and full employment are unusual: investment is unstable because of uncertainty and risk but also because of instability in unregulated financial markets caused by speculation. Full employment requires government intervention to keep interest rates low and stable, and some form of "socialization of investment." The Polanyi problem refers to the necessity for social norms and institutions that promote stability, fairness, equity, and the common good (as Adam Smith also argued); most of these require state...