ABSTRACT
Coinciding with the demise of Keynesianism at the end of the twentieth century, and partly contributing to that demise, new perspectives emerged that are sometimes described as the emergence of a new political economy. Although these theorists often build upon insights they borrow from Adam Smith, they leave aside some of the classical political economists’ ethical preoccupations to which I alluded in Chapter 2. Therefore, their efforts cannot properly be described as a rediscovery or rebirth of classical political economy. The most prominent perspectives in this regard include Public Choice, Austrian economics (which I approach in this chapter mostly through the lens of Hayek’s works) and German Ordoliberalism. This chapter pays considerable attention to the nuances that separate these various schools. But it also underlines their common insistence of the empirical and normative proposition that in their ineffective and costly attempts to rectify market failures, governments cause even more damaging “government failures.” The subtext is evident: market-oriented policies and a normative emphasis on individual responsibility are preferable to excessive dependence on regulatory and fiscal interventionism. In short, politics should be constrained by the freedom-enhancing logic of market economics.
