The salary of most Americans has been stagnant for decades. Inequality has increased sharply. Globalization and technology have enriched some, but they have also caused job losses and impoverished communities.
These problems, according to many economists, are in part by-products of government policies and corporate practices shaped by a set of ideas that advocated free markets, free trade and a non-interference role for government in the economy. Its most common label is “neoliberalism.”
A group of philanthropists and academics say it’s time for a new set of ideas to guide the economy. To think about alternatives, the foundations William and Flora Hewlett and Omidyar Network announced this Wednesday (16) that they are investing more than US$ 41 million (R$ 212 million) in economic and political research with this objective.
“Neoliberalism is dead, but we haven’t created a replacement,” said Larry Kramer, president of the Hewlett Foundation.
The initial recipients of grants to create research programs are Harvard University’s Kennedy School, Howard University, Johns Hopkins University, as well as MIT (Massachusetts Institute of Technology) and the Santa Fe Institute.
According to Kramer, the Ford Foundation and the Open Society Foundations have also committed to joining the initiative and making donations later this year to research centers abroad.
Universities agreed not only to provide a space for research centers, but to bring together academics and students from various disciplines, communicate their findings, and raise funds to keep the programs going.
The expectation is that other funders and universities will do the same. “Our role is to provide fertilizer and water to grow something different,” Kramer said. “We think this is the next intellectual wave.”
The widely funded effort is based on the thesis that ideas provide the framework for policy and the boundaries of public debate. The free-market worldview was most vigorously promoted in the 1960s and 1970s by a group of economists at the University of Chicago, led by Milton Friedman, who became known as the Chicago School.
In the 1980s, the administration of Ronald Reagan in the US and that of Margaret Thatcher in Britain enthusiastically embraced the neoliberal model. It was also the Clinton administration’s main mindset for free trade agreements and financial deregulation. This has also been true of the Obama administration generally, in areas such as trade, bank bailouts and antitrust enforcement.
This is not so much the case with the Biden administration. Jennifer Harris, who led the economy and society program at Hewlett, where she began work on the new initiative, joined the government’s National Economic Council team last year.
In recent years, many prominent economists have questioned the wisdom of leaving so many human achievements to the markets. Economists are increasingly researching inequality, and this is a focus of the universities that receive the grants.
“Reducing inequality must be a goal of economic progress,” said Dani Rodrik, an economist at the Kennedy School at Harvard and a leader in the project to reimagine the economy. “We have all this new technology, but it doesn’t cover large parts of the workforce and not enough parts of the country.”
Grant recipients are qualified market enthusiasts. “Markets are great, but we have to get over this notion that ‘markets are autonomous, so let the market take care of it,'” said David Autor, a labor economist at MIT. “This fatalism is a decision.”
Author is one of the leaders of MIT’s program to shape the future of work. “We’re calling it ‘molding’ because it’s interventionist,” he said.
The MIT project will research the challenges faced by workers without a four-year college degree — nearly two-thirds of the US workforce — and measures that can improve their jobs or move them into higher-paying occupations.
The MIT group will also explore policies and incentives to guide technological development in ways that increase the productivity of workers, rather than replace them.
Each of the centers will take a different approach. Howard’s program will examine racial and economic inequalities. The Johns Hopkins center will explore the rise and spread of neoliberalism and lessons learned. And Instituto Santa Fé will develop new economic models — updated with insights and data from behavioral economics, innovation studies and competition in digital markets.
Hewlett is contributing US$35 million in grants to the four universities, and the Omidyar Network is making a US$6.5 million (R$33.6 million) donation to the Santa Fe Institute.
The Hewlett Foundation, created in 1966 by a Hewlett-Packard co-founder and his wife, is one of the largest philanthropic entities in the United States. The Omidyar Network, created in 2004 by Pierre Omidyar, founder of eBay, and his wife, Pam, includes a foundation and an investment arm that supports for-profit social impact ventures.
Both foundations are identified as left-wing because they support work in areas such as climate change, gender equality and economic justice. But Mike Kubzansky, CEO of the Omidyar Network, said today’s economic challenges trump partisan divisions.
“I think there is broad consensus that the traditional set of economic ideas is past its expiration date,” he said.
Translated by Luiz Roberto M. Gonçalves
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