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The false choice between neoliberalism and interventionism

By Yuen Yuen Ang

18 Apr 2023 · 4 min read

Editor's Note

Western democracies have long pursued economic policies that prioritized markets over intervention, Yuen Yuen Ang writes in PS. But China has shown that governments aren't limited to a binary choice.

WASHINGTON, DC – To intervene or not to intervene. That has been a central debate about the state’s role in the economy at least since the eighteenth century. Over the past 40 years, the United States and other Western liberal democracies have championed free markets, free trade, and a limited role for government – a stance known as neoliberalism or “market fundamentalism.” To some commentators, the recent passage of the CHIPS and Science Act and the Inflation Reduction Act, US President Joe Biden’s two signature industrial policies, marks the end of neoliberalism and the re-emergence of interventionism as the dominant paradigm.

But this is a false dichotomy. Governments are not limited to a binary choice between laissez-faire and top-down planning. A third option, long-neglected by policymakers and economists, is for governments to direct bottom-up processes of improvisation and creativity, akin to the role of an orchestra conductor. One can find plenty of examples of this in China and the US.

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