5 academic institutions get $40 million to promote economic overhaul

Two philanthropic organizations, the Hewlett Foundation and Omidyar Network, today committed a total of more than $41 million over five years to five academic institutions as part of a broader effort to change conventional wisdom about how economy.

The effort is an attempt to challenge neoliberalism, an intellectual movement that began in the late 1940s that established widely accepted principles about the role of markets and governments that have become firmly established over the decades.

The intellectual framework known as neoliberalism developed by thinkers like Friedrich Hayek and Milton Friedman, resulted in policies to shrink government, reduce public debt, open up trade, and deregulate the market that took hold. magnitude under the Reagan administration in the United States and under the watch of Margaret Thatcher in Britain.

Since then, policymakers have had too much faith in using a market-based approach to solving social ills, says Wayne Frederick, president of Howard University, one of the recipients.

“Neoliberalism has really taken us down a certain path in finding solutions,” Frederick said. “This project allows us to open up that mindset and gives us more options.”

Howard’s Center for an Equitable and Sustainable Society will use the money to study how market forces and government regulation have contributed to health care disparities, income inequality, housing insecurity and poverty. Other problems.

The 2008 recession and the growing gap between rich and poor highlighted the failure of the neoliberal approach, say critics of neoliberalism, including Larry Kramer, chairman of the Hewlett Foundation.

According to Kramer, the approaches used to describe different ways of thinking about society and the economy – such as freedom versus equality, or central control versus free markets – are outdated and need to be replaced by “the next great intellectual movement.” .

The idea, says Kramer, is to nurture a new generation of scholars who, in turn, influence think tankers, the media and policy makers who can boil down complex economic theory into an easy-to-understand nugget that an average member of the public can digest. Kramer uses “government is bad, markets are good” as an example of a neoliberal mantra that has caught on with much of the public.

“Political ideas, even very good political ideas with evidence, will not stay true unless they are backed by belonging” to a larger framework of shared understanding.

(The Hewlett Foundation is a financial supporter of the Chronicle.)

where does the money go

In addition to the Howard University center, support from Hewlett and Omidyar will go to the Reimagining the Economy project at the Harvard Kennedy School; Johns Hopkins University Center for Economics and Society; the Shaping the Future of Work program at the Massachusetts Institute of Technology and the Santa Fe Institute.

Hewlett will provide the bulk of the grants for its $50 million Economy and Society Initiative. Omidyar will provide $6.5 million of the total to the Santa Fe Institute.

The Omidyar grant is part of his Reimagining Capitalism program, which also supports workers’ rights, trying to get companies to think beyond shareholder interests and tackling the ramifications of concentrations of power in the economy. – whether in technology, pharmaceuticals or agriculture. Over the past three years, Omidyar has donated more than $60 million to this effort.

Other related grants from the Ford Foundation and the Open Society Foundations are forthcoming.

Ford plans to award grants to institutions doing similar work in Africa, Asia and Latin America, and Open Society is “exploring how best to support heterodox economic thinking” through its Open Society University Network, according to a press release from Hewlett.

Take a long view

Grants to universities are intended to incentivize institutions to hire researchers who challenge current economic assumptions.

An annual conference is planned in Santa Fe to share ideas and promote research both with fellow scholars and, according to Michael Kubzansky, chief executive of the Omidyar Network, with outsiders like think tank leaders and Hollywood producers. who want to change the way the role of government and the economy is presented on screen.

A big short-term goal, Kubzansky says, is to develop a new undergraduate program in economics. Kubzansky says his two children, who both attended college after the 2008 recession, used textbooks suggesting that raising the minimum wage would hurt the economy or that rising government deficits would kill growth. These ideas, Kubzansky says, should be challenged.

The exchange of textbooks may be easier than the larger goal of instituting a new dominant view of the role of markets and government. But neoliberalism has benefited from the help of influential donors, including Richard Mellon Scaife and Charles Koch.

“As a funder, we are happy to play the long game,” says Kubzansky. “We’d like to see traction sooner, but we’re willing to take some time for these ideas to develop. Once they get in, they’re very sticky and hard to dislodge.

trendy phrase

One of the biggest challenges of the whole approach is defining exactly what “neoliberalism” means, suggests Bruce Caldwell, director of the Center for the History of Political Economy.

Neoliberalism is a buzzword, he says, that can mean just about anything and is usually used to pejoratively label an approach someone doesn’t like.

Caldwell, a biographer of Hayek, downplays the role of foundations in bolstering neoliberal policies in the 1980s. Privatization and deregulation became popular, he suggests, because of the pain inflicted by “stagflation” – high unemployment and a listless stock market – which took hold in the 1970s.

“It was a natural reaction,” he says. “People didn’t need right-wing foundations to point it out.”

White House interest

Kubzansky and Kramer are confident that their efforts will eventually pay off.

Kramer mentions a number of funders involved in similar efforts, including the Children’s Investment Fund Foundation, the Economic Security Project, the Nathan Cummings Foundation, the Rockefeller Brothers Fund, the Skoll Foundation and the Wallace Global Fund.

Last year, Jennifer Harris, who led the Hewlett Economy and Society Initiative for three years, left to join the Biden administration as senior director of international economics and labor on the national security and labor councils. national economy. The nomination, says Kramer, is an indication that there is interest in the White House to consider new ways of thinking about the role of government and its relationship to markets.

While it is essential to continue the intellectual work on neoliberalism, says Kramer, it is essential to translate these efforts into policies. Not only is neoliberalism not up to the task of reducing wealth inequality or job loss due to new technologies and automation, but it is, according to Kramer, a key source of hyper- partisan who threatens democracy.

“We don’t have the time the neoliberals had,” says Kramer.

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