Writing for Dollars & Sense, David M. Kotz, a professor of economics at the University of Massachusetts, contrasts the way things were before the rise of neoliberalism and how they have changed since Reaganism. His two-part essay is chock full of graphs and assorted facts.
Here’s one excerpt:
Before: In the 1950s, the highest personal (marginal) income tax rate was 91.5%. Despite yowls of protest from the rich and their hired intellectual guns warning that this would kill incentives, investment was robust and the economy grew at record rates for 25 years.
After: In the 1980s, top income tax rates sank to 28% amidst promises of expanding saving and investment, with a rising tide to lift all boats. Instead, saving almost disappeared, investment was lackluster, and the tide lifted the yachts of the 1% while swamping the rafts of much of the remaining 99%.
Kotz tells us that none of this was by accident.
As big business deserted its previous coalition with organized labor, and allied with small business organizations that had never supported regulated capitalism, it was able to rapidly sweep away the institutions and dominant ideas of regulated capitalism. While organized labor was relatively strong at that time, it could not stop a determined push by a united business class to carry out economic restructuring at the expense of labor and the majority of the population. By the early 1980s, a new form of capitalism had emerged—the neoliberal capitalism that we still live under to the present day.
The end of regulated capitalism and the rise of neoliberalism brought with it a new orthodoxy in economics. Gone were the days when professors at America’s leading universities taught that capitalist economies required close regulation by the government to avoid big depressions and high unemployment, and that trade unions played a positive role in reducing inequality. In its place arose a new worship of “free markets,” rejecting any role for government or trade unions in improving economic outcomes.