Did classic liberalism work? By classic liberalism, I mean the type of political economy proposed and explained by Adam Smith and John Stuart Mill. In their theories, maximum economic freedom was supposed to work by an "invisible hand" to increase the wealth of all people, and increase their happiness. Total "utility" (implied to be happiness) was maximized in a system with this freedom; mathematical proofs of this exist and are the basis of much economic theory. I've seen versions of this proof in graduate school level textbooks and B-school classes.
The question is, though, DID it work? And IS it working? Putting theory into practice and testing under dynamic conditions could expose ERRORS and unrecognized assumptions. Astrophysicists in the 1970s found this out; they assumed that all matter and energy could be seen directly or indirectly in some manner or marker from emitted light or other electromagnetic radiation. But clear contradictions existed even then in the rotation curves of galaxies. Decades later, dark matter and dark energy were discovered. The theories were incomplete in the 1970s.
Now, the Panic of 2008, the Great Recession and actual events since the 1970s seems to have exposed a flaw - a contradiction - in classic liberalism. Has the utility-happiness-wealth of the common man and woman increased since the 1970s? The "purported" deal - compact - of classic liberalism was that the hegemonic (Ruling) classes working with the political bureaucracy would cause GNP to increase on and on. But to the common man and woman, GNP is a meaningless number. They care about their personal happiness - their ability to make a living and raise their families and live comfortably throughout their lives.
From 1800 until at least the 1960s, it's rather obvious the Deal did work over the long term. By the 1950s and early 1960s in America a family could live, buy a home, send children to college or to a good job in the trades or a plant, and have a reasonable retirement. In 1800 or even 1900 that was a distance dream.
BUT now? And since then? Is there DATA that this "Deal" did not work and is not working, or is it still working? The 40-50 years since 1960-70 is long enough a baseline - that's almost two generations.
This is the question of the century. Has or is classic liberalism reached a range where it fails? Theories can work for awhile, but then breakdown.
My "gut" is that the answer is classic liberalism has been failing for decades, that the lives of the common man and woman has NOT been improving since the late 1960s and 1970s. One has to measure such a concept corrected for age and family composition. From my memories, the level that a family could do and how they could live in 1965 was really far better than now. A common American family must work much harder and longer to achieve the same standard of living.
Is my "gut" instinct correct?
I don't know. I am now researching this matter and will report on the results soon. Demographics, family composition and propensity to work for wages (i. e., women in the workforce) complicate the question, but I'm aware of those factors and will try to take them into account. Meanwhile, could you search your memories about this question with an open mind?
Word of the Day
"Heterodox" - adjective [$10]
Heterodox means (of a person, opinion, etc.) not orthodox.
Sentence: View from the Bunker provides heterodox opinions on investing, government and politics.