Meet the New Normal, Same as the Old Normal: The State-Market Balance and Economic Policy Debates after the Pandemic

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What will happen to economic policy debates after the Pandemic? The majority view seems to be that nothing will ever be the same again. A new normal will be upon us. A combination of prediction and hope points to a major reorientation of the state-market balance towards the state. The last time we had such millennialist thinking was of course after the financial crisis of 2008-2009, when a different sort of contagion spread through the world. Two decades before the great financial crisis, the fall of the Berlin Wall ushered in the new normal claims of that era. Most famously, Fukuyama announced the End of History, the final victory of liberal politics and (neo) liberal economics. This paper begins with an account of current “new normal” statements from prominent academic sources on how economic policy will shift in favor of state and away from market. It then gives an account of past “new normal” claims and how those turned to be reversed in due course. It then presents a theory of evolution in political economy thinking, drawing on the work of Edmund Burke, John Maynard Keynes and Thomas Kuhn, arguing that the evolution is more likely to take the form of cycles rather than a linear development in one direction or another. Of course, the current pandemic will wreak economic havoc and reset at least some of the initial conditions for the global economy. The unsettled times and the proclamations of the new normal will surely be with us for several years. However, if past patterns are anything to go by, at the decade’s end it is as good prediction as any that the new normal will be the same as the old normal.

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