Richard Hanania, “The System Everyone Hates is the one that has actually worked,” Human Progress: Doomslayer, 25 October 2025.The last major experiment in economic Liberalism was the Interwar period (1918–1939), which ended in the catastrophe we know as the Great Depression, and which led to a global rejection of 19th century laissez-faire capitalism and an era of successful state intervention and mixed Keynesian economies from c. 1945 to the 1970s.
Richard Hanania has produced a bizarre history of Neoliberalism filled with grossly oversimplified statements or outright errors, and that reek of the desperation and panic of Neoliberal ideologues as their system crashes and burns just as Interwar Liberalism did.
I don’t claim to comprehensively refute Hanania’s post here, but provide a brief overview of his claims.
Let us examine major points in Hanania’s paean to Neoliberalism and clearly demonstrate why he is utterly wrong, and why the post-1980 experiment in Neoliberalism has failed and will likely totally collapse before the end of this decade.
(1) Has the Neoliberal era been one of economic stability?
Hanania makes the following claim for Neoliberalism:
“[sc. During the Neoliberal era, b]oth the US and much of Western Europe have experienced what economists call the “Great Moderation,” a period of steadier growth and fewer, shorter downturns. While the Great Recession of 2008 was a major exception, it stood out precisely because it interrupted what had become an era of relative economic stability compared to the turbulence of earlier decades. The only other serious economic crisis since the mid-1980s was the COVID-19 downturn … .”This claim is factually untrue.
The Neoliberal era has seen some of the worst economic instability since the laissez-faire 19th century and the economically-Liberal period from 1919 to the 1930s.
In particular, financial deregulation and the financialisation of economies in the Neoliberal era have caused some of the worst asset bubbles, financial crises and recessions in world history.
Here is a list of Neoliberal asset bubbles and financial crises:
Neoliberal Asset Bubbles and Financial CrisesThe post-WWII era (the years from 1945 to the 1970s) of financial regulation and Keynesianism was almost totally free from crises of this type.
(1) 1980s US Savings and Loan Crisis (1986–1995)
Financial deregulation and risky investments caused the failure of over 1,000 savings and loan institutions, which cost US taxpayers about $160 billion.
(2) 1990s Japanese Real Estate Bubble and Lost Decade (1990–2000s)
Financial deregulation in Japan led to a massive real estate and stock market bubble, followed by bank crises, banking failures, and recession.
(3) 1990s East Asian Financial Crisis (1997–1998)
Capital control liberalisation and financial deregulation allowed asset bubbles and capital inflows, which then catastrophically reversed, as well as speculative attacks on national currencies in Thailand, Indonesia, South Korea, and other nations.
(4) Dot-Com Bubble (1999–2000)
(5) 2008 Global Financial Crisis (2008–2009)
Neoliberal financial deregulation allowed a massive real estate bubble, with toxic subprime mortgage defaults, a global financial crisis and the worst global recession since the Great Depression.
(6) The Eurozone sovereign debt crisis (2009–c. 2015)
The fundamental cause of the Eurozone sovereign debt crisis and the bad deflationary recessions and/or banking crises during this period – in Greece, Ireland, Portugal, Cyprus, Spain and Italy – was ultimately the flawed Neoliberal design of the EU and Eurozone monetary policies: the Eurozone effectively robbed smaller nations of monetary sovereignty, which drove them into brutal austerity that, most notably, crippled the economies of Ireland and Greece.
Recall that the Global Recession of 2008–2010 – ultimately caused by Neoliberal financial deregulation – was the worst economic crisis since the Great Depression of the 1930s.
How on earth anybody could claim that a system that produced this catastrophe – as well as the other destabilising asset bubbles and financial crises listed above – is to be regarded as “superior” to the Keynesian era boggles the mind.
With regard to Hanania’s “Great Moderation”, I direct the interested reader to detailed Post Keynesian and MMT refutation of this Neoliberal myth, in the following analyses:
Mitchell, Bill. 2010. “The Great Moderation Myth,” William Mitchell – Modern Monetary Theory, 24 January, 2010.In essence, there is no reason to think the “Taylor Rule” was the cause of the moderate inflation of the 1990s and 2000s. Instead, what lowered inflation was the gutting of trade unions, labour rights, and collective bargaining, as well as the increasing offshoring of manufacturing to the Third World, which allowed cheap imports of manufactured goods into the West. But these trends had a very serious cost: in many nations, there was real wage stagnation and an end to the prior link between real wage growth and productivity growth.
Palley, Thomas I. 2008. “Demythologizing Central Bankers and the Great Moderation,” Thomas Palley: Economics for Democratic and Open Societies, 2 April 2008.
Perry, N. and N. Cline. 2013. “Wages, Exchange Rates, and the Great Inflation Moderation: A Post-Keynesian View,” IDEAS Working Paper Series St. Louis.
Worse still, the hollowing out of manufacturing, particularly in the US, has been a disaster all over the West. In the US, the situation is so bad that it is supposedly the case that the American army would run out of long-range munitions in less than a week and would be incapable of effectively manufacturing more to maintain its war effort.
Moreover, the academic economic theories underlying Neoliberalism – such as New Classical economics, Milton Friedman’s Monetarism, and the New Consensus Neoclassical Economics – have been discredited by economic history, particularly the financial crisis and Great Recession of 2008–2010.
To take one important example, the quantity theory of money was the foundation of Monetarism – the macroeconomic theory of Milton Friedman. Monetarism was tried in the US and the UK in the late 1970s and early 1980s, and failed miserably, because, contrary to the theory, it turned out that Central Banks could not directly control the quantity of money and its growth rates.
In a 2003 interview with the Financial Times, even Milton Friedman himself admitted that monetary targeting as a central bank policy was a failure:
“… prepare to be amazed: Milton Friedman has changed his mind. ‘The use of quantity of money as a target has not been a success,’ concedes the grand old man of conservative economics. ‘I’m not sure I would as of today push it as hard as I once did.’”Apparently nobody told Richard Hanania this.
Simon London, “Lunch with the FT – Milton Friedman,” Financial Times (7 June 2003).
(2) Is China Neoliberal?
Hanania argues that China’s spectacular economic development since 1990 was generally caused by the embrace of Neoliberalism.
But this is not true. China remains a state with a highly interventionist government that has rejected the Neoliberal consensus. China’s post-1990 embrace of freer trade, much more private enterprise, and inflows of foreign direct investment do not per se constitute a Neoliberal economic policy.
Now nobody doubts that liberalised foreign direct investment and international trade have been major factors in the success of China, but one cannot look at these policies in isolation.
In reality, China has maintained capital controls, state-owned banks, a pegged, undervalued currency (as a mercantilist policy to boost exports), a large state-owned industrial sector, subsidies to key domestic industries, huge non-tariff barriers, and an activist industrial policy.
There has also been massive technological and intellectual property-rights theft in the Chinese model, and this was also often done inside China by forcing foreign corporations to agree to joint venture companies as the condition of access to Chinese markets.
So China’s economic model is a form of nationalist neo-mercantilism that famously managed to avoid the East Asian Financial Crisis (1997–1998) by means of its capital controls, currency peg, and financial regulation.
Hanania attempts to find a solution to the conundrum that China did not embrace pure Neoliberalism with the complaint that, “although China has grown impressively, it still remains much poorer than other East Asian nations,” which, while true in terms of per capita GDP, ignores the fact that China had a 1.263 billion population as recently as 2000, and so its economic development in terms of per capita GDP has simply been slower and more difficult than East Asian nations with a much lower population.
At the end of his post, Hanania demands the following of opponents of Neoliberalism:
“At the very least, postliberals of the right and left should be able to point to countries that rejected neoliberalism and succeeded on the specific measures that they care about. But they cannot do that.”Hanania is blissfully unaware that China is absolutely a nation that rejected neoliberalism and has succeeded to the point that it is the world’s manufacturing powerhouse. China, while technically still Communist, nevertheless resembles much more a National Socialist/fascist nation and economy from 1930s Europe than a traditional Communist or Neoliberal nation.
(3) Did Taiwan and South Korea industrialise because of Neoliberalism?
Yet another embarrassing factual error in Hanania’s analysis is his belief that the spectacular economic development of Taiwan and South Korea can be attributed to Neoliberalism.
But these nations followed the state-led growth model pioneered by Japan, which involved import-substitution industrialization (ISI) with industrial policy – the very opposite of Neoliberalism.
(4) Russia has turned away from Neoliberalism
Despite Hanania, the success and strength of Russia’s economy since 2010 has been based on a shift in its economic model from Neoliberalism to state intervention. After punishing Western sanctions from 2014, Russia adopted a state-led “Import Substitution Industrialization” program, Russia halted privatisation of the commanding heights of its economy, maintained state-ownership over crucial sectors like energy and banking, pursued large-scale state-financed public works, and reduced capital flight via capital controls.
Despite even more draconian Western sanctions on Russia after 2022, these have utterly failed to destroy Russia’s economy and – despite the drumbeat of laughable Western propaganda – Russia’s incredibly dynamic economy in the face of US economic warfare and continuing military victories in Ukraine could not be a more stark example of the humiliating failure and bankruptcy of Neoliberal economics.
Conclusion
Richard Hanania’s history of Neoliberalism contains breathtaking errors and omissions. Not only is Neoliberalism not the shining success story he seems to think it is, but also the Neoliberal era is arguably on its death-bed, and has been since about 2017.
Even the United States itself has abandoned the fundamental quasi-religious dogma of Neoliberalism: free trade. When Donald Trump imposed his new tariff regime on the United States beginning in January 2018, this marked an astonishing repudiation of Neoliberalism.
And, remarkably, the Biden administration largely retained most of these tariffs, and in some cases even increased them.
Finally, one need only reflect carefully on the fact that China has never been a textbook Neoliberal economy, but is now the global manufacturing powerhouse. Furthermore, Russia has repudiated Neoliberalism and its very survival and almost certain future victory in the Ukraine war in the face of vicious economic warfare by the Neoliberal West will be seen by future historians as the final proof that Neoliberalism has totally and utterly failed.
