Was the political economy under Blair best described as neo-liberal or reformed Keynesian?

Résumé du document

In order to answer the question as to whether the political economy of New Labor under Blair was best described as neo liberal or reformed Keynesianism, it is necessary to define the two ideological trajectories. Indeed, neo liberalism sees the markets as self regulating entities and transforms the selfish forces of the individuals into general good. For them, the market provides the individuals with incentives, and by setting them in competition with each other, avoids any type of exploitation. And as far as the role of the government is concerned, it is believed that laws and organisms should be adapted to the ones of the market. Of course, this is an extreme vision, but in practice, it is characterized by very little state intervention and inflation targeted through monetary mechanisms.

Extraits

[...] We will first note that the political economy in Britain since the end of the Second World War has been shaped by a progressive shift in paradigms. Then, we will see how the rhetoric of the Labour Party under Blair has focused on a definition of a “Third between these two paradigms of Keynesian welfarism and neo liberalism. On the next section, we will however examine how despite some characteristics which could define New Labour's political economy under Blair as new Keynesian; it has widely followed a neo-liberal trend both in its ideology and its practice of policy. [...]

[...] The purpose of the “golden rule” was to ensure an equilibrium in the balance of payment, and even a surplus in the conditions permitted it. The second principle of fiscal policy was the “sustainable investment rule”. It consists on keeping the debt at below the rate of 40 per cent of the GDP[37]. Here it is also necessary to add the fact that Blair's government committed itself to the spending plans of the previous conservative government, which explains the tightness of fiscal policy during the first term of New Labour in Cabinet[38]. [...]

[...] New Labour Macroeconomic Policy and the Political Economy of coarse tuning”, British Journal of Political Science 37 Colin Hay, “What's in a name? New Labour's putative Keynesianism”, British Journal of Political Science 37 Steven Kettell, New Labour wants the Political Quarterly 75 Colin Crouch, terms of the Neo-Liberal Consensus”, The Political Quarterly 69 Colin Hay, “Blaijorism: towards a one-vision polity?”, The Political Quarterly 69 Michael Kitson and Frank Wilkinson, economics of New Labour: policy and performance”, Cambridge Journal of Economics pp. [...]

[...] On the other hand, reformed Keynesianism is hard to circle, as since the 1970s, different branches of new Keynesians appeared[4]. However, they conserved the more traditional conception of aggregate demand as playing a role in the economic activity. What is more, the pursuit of full employment remains intact, although the percentage at which this rate would have to be set had already been considered by Keynes, who had estimated that a rate of 8 per cent of unemployment could actually be considered as full employment. [...]

[...] Indeed, for Peter Burnham, the most characteristic aspect of economic policy under Blair was the instauration of a new form of statecraft based on depoliticisation. He defines the concept as process of placing at one remove the political of decision making”[54]. As he explains, the politicised models of governing had proven to be a failure, whether they adhered to the Keynesian welfarist or to the neo liberal paradigms. As we have seen before, both paradigms had culminated on several crises on the economic ground, the post war consensus being eroded by the instability of the decade of the 1970s, and the neo liberal model being questioned in the rhetoric of New Labour as early as 1997 in that sense that the “Third proposed a certain transformation of the paradigm. [...]