Ceremonial Macroeconomics: Market vs. Plan and the Masking of Inequality

Abstract

This essay explores the dominance of macroeconomics on economic policy by considering the policy response to the post-pandemic inflation. I argue that this emphasis on macroeconomics masks long-run structural problems, such as inequality and ecologically unsustainable economic activity. The Federal Reserve raised interest rates because it is what we do about inflation even though they attributed rising prices to Covid-related supply disruptions and the war in Ukraine. However, raising interest rates is likely to be counterproductive as it disrupts private efforts to restructure production and consumption, exacerbating the inequalities between those that can afford to invest in more fuel-efficient technologies. Instead I argue that the legacy of neoliberalism has limited the range of policy options to address sector specific disruptions that combine to effect inflation. The focus on inflation and raising interest rates has in turn, shifted the way the problem away from the issues identified during the pandemic, such as the conditions of essential workers and the care crisis, to a problem of the high cost of labor.