by Richard Morrison
The American Institute for Economic Research
The publishing world is awash in books about how government has failed the people by shrinking. Ruchir Sharma has given us the rare book about how government failed by growing too large and doing too much. His proposed fix is compelling and persuasive, but his book’s most valuable contribution may be simply causing readers to rethink what has become a bafflingly popular narrative about neoliberalism, austerity, and the supposed triumph of free-market ideology. One of the most common theories about the last half-century of political and economic history rests on the weakest possible foundation.
The argument Sharma takes on in What Went Wrong with Capitalism will be familiar to anyone who has read any current writing on political economy. Since the New Deal, enlightened government tax-and-spend priorities protected the poor and provided for economic mobility. The US economic expansion after World War II continued this virtuous, shared prosperity. Then, starting in the 1980s under Ronald Reagan (with parallel changes under Margaret Thatcher in the UK), market fundamentalism took hold, with government budgets for social services slashed, essential services privatized, and corporate greed turbo-charged. The result, critics charge, has been an increasingly unfair society. Income inequality has exploded and only the very rich have benefitted.