The Past as Future? The Contribution of Financial Globalization to the Current Crisis of Neo-Liberalism as a Development Strategy

During the initial quarter-century of the post-World War II era, the development strategies urged on less-developed countries by the economic think tanks and foreign aid agencies of the capitalist world were shaped by Keynesian macroeconomics and by two “lessons” from history that further enlarged the economic role assigned the state in the development process. During the second post-war quarter century, the mainstream perspective shifted to neo-liberalism, which reoriented macroeconomic policy to accord with monetarism, structural policies with competitive general equilibrium theorizing, and reinforced the reorientation with “lessons” from history that diminished the role of the state in the development process. Recently, however, we have been witnessing growing defections from neo-liberalism at the ideational level and tectonic shifts away at the political level. Optimistically, these trends will return capitalistic development strategies and their theoretical rationale, in spirit though not in detail, back to those of the initial post-war quarter century; pessimistically, not before passing again through a 1930s-type dark tunnel