Why are neoliberal ideas so resilient in Europe’s political economy?

Abstract

Despite the economic crisis that hit full force in 2008 in the US and Europe, political leaders have made little attempt to rethink the neoliberal ideas that are in large part responsible for the boom and bust, let alone to come to terms with how immoderate the ‘Great Moderation’ really was. Much the contrary, neoliberal ideas seem to continue to constitute the ruling ideas. In the financial markets, where the crisis began, reregulation remains woefully inadequate, while the only ideas in play are neoliberal, either for more ‘market-enhancing’ regulation or in favor of greater laissez-faire. The biggest puzzle, however, is the response to the crisis by Eurozone countries that have embraced ‘market discipline’ through austerity and, in so doing, have condemned themselves to slow or no growth. This is in contrast to the US, which has posted better economic results, despite being torn between Republican fundamentalists advocating austerity and a more pragmatic leadership focused on growth.