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All ideologies eventually (seem to) fail

Summary:
All ideologies reach a point where they are perceived to have failed. What can we learn from that fact? I’d argue that there are almost no lessons to be learned. Capitalism was widely seen to have failed in the early 1930s. Authoritarian nationalism was widely seen to have failed in 1945. Liberalism was widely seen to have failed in the 1970s. Communism was widely seen to have failed in 1989. Neoliberalism was seen to have failed in the 2010s. Prediction: Islamic fundamentalism will be seen to have failed in the 2020s. Just to be clear, I’m a neoliberal.  So I don’t believe either capitalism or neoliberalism actually failed, while I do believe that authoritarian nationalism, (1960s) liberalism, communism and Islamic fundamentalism actually did fail. But that’s not

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All ideologies reach a point where they are perceived to have failed. What can we learn from that fact? I’d argue that there are almost no lessons to be learned.

Capitalism was widely seen to have failed in the early 1930s.

Authoritarian nationalism was widely seen to have failed in 1945.

Liberalism was widely seen to have failed in the 1970s.

Communism was widely seen to have failed in 1989.

Neoliberalism was seen to have failed in the 2010s.

Prediction: Islamic fundamentalism will be seen to have failed in the 2020s.

Just to be clear, I’m a neoliberal.  So I don’t believe either capitalism or neoliberalism actually failed, while I do believe that authoritarian nationalism, (1960s) liberalism, communism and Islamic fundamentalism actually did fail. But that’s not the point of this blog post. What I think doesn’t matter.

So what does it actually mean when a modern intellectual says something like, “neoliberalism has failed”. What exactly does that mean?

When people say an ideology like neoliberalism has failed, their thought process is as follows:

1. We have been in the neoliberalism era for a few decades.

2. Problems have cropped up.

3. Ergo, neoliberalism has failed.

That’s it? Surely there must be more to it than that? After all, problems always crop up over time. That’s inevitable. If that were the criterion for failure then every single ideology would eventually fail, except those that have never been tried. It must be more complicated than that!

Nope, it’s that simple. Every single ideology will be seen to have failed after some period of time. There are no exceptions.

One can imagine alternative universes where not all ideologies fail. Thus you could imagine a world where ideologies are judged on a cross sectional basis, not a time series basis. People might compare highly neoliberal places like Switzerland, Denmark and Singapore to less neoliberal places like Greece, Italy and the Philippines, and then those countries could be compared to highly illiberal places like North Korea, Venezuela and Cuba. In that universe, not all ideologies would seem to fail over time.

But that’s not the universe we live in. In our universe, intellectuals use time series evidence to judge ideologies. In this universe, all ideologies are eventually perceived to have failed, because it’s inevitable that problems will eventually crop up. So if you are young then don’t get too attached to your pet ideology. If it’s ever enacted, you will eventually see it get discredited.

Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment". In May 2012, Chicago Fed President Charles L. Evans became the first sitting member of the Federal Open Market Committee (FOMC) to endorse the idea.

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