The Myth of Trickle-Down
By Gwydion M. Williams
Tony Jackson confuses Ideological Capitalism – the notion of benevolent selfishness or the invisible hand – with the actual history of the world economy. A history where Ideological Capitalism was balanced by Tory Philanthropy, Christian Democracy, Welfarism, Social Democracy, Communism, Keynesianism, the Military-Industrial Complex and Asian Values.
Robert Owen began with Tory Philanthropy, but then became a founder of Socialism and Communism. Which makes it odd to cite him as an example of the merits of Ideological Capitalism.
When the East Asian Tigers made amazing progress with a mix of Keynesianism and Asian Values, this is counted as a success for Ideological Capitalism. When they run into trouble after making some concessions to Ideological Capitalism, this is also counted as proof of the merits of Ideological Capitalism.
Khrushchev’s odd attempt to combine Ideological Capitalism with Leninist dictatorship turned a Superpower into a shambles. Replacing the dictatorship the Western-style democracy has only make things worse. Whereas Leninist dictatorship combined with Keynesianism is working very well in China.
Keynesianism won the Cold War for the West. The attempts to ‘improve’ it in the 1970s by moving in the direction of Ideological Capitalism has not improved overall growth. What it has done is benefit the rich at the expense of the poor.
Trickle-down was a specific prediction that Thatcher / Reagan policies would in the long run benefit the poor. And it was a simple falsehood: the poorest 10% stopped improving their position under Thatcherism. While in the USA, fully 90% of the population are no better off than they were in the 1970s.