The demise of a post-war Keynesian policy paradigm of discretionary fiscal fine-tuning in pursuit of full employment is widely associated with the rise of a monetarist economic policy paradigm stressing fixed policy rules and money supply targets to secure price stability. Challenging these conventional wisdoms, and questioning the usefulness of the paradigm change framework, this article interrogates how far monetarism did replace Keynesian approaches to macroeconomic policy in the UK and USA after the 1970s. Crucial aspects of monetarism—notably the commitment to abandon stabilisation policy and shift to fixed policy rules—were overridden shortly after brief, abortive attempts to use monetarism as a governing doctrine. A paradigm lens overstates the clarity of monetarist ideas, failing to acknowledge how these were reconciled to (New) Keynesian ideas by the end of the 1980s within a pragmatic composite (the Taylor rule). The wider theoretical contribution of this article is to revisit understandings of paradigmatic change in political science and political economy. We argue that taking a paradigmatic view of economic ideas and their relationship policy orders can overstate change, overlook continuities, and overrate the efficiency of punctuated change. It also under-appreciates scope to combine ideas from different paradigmatic homes.
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A view we critique below.
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The author would like to thank Wes Widmaier in particular for rewarding research collaboration and fruitful discussion which proved enlightening on numerous themes dealt with in this paper. He would also like to thank (in no particular order) Matthew Watson, Benjamin Braun, Jack Copley and Jim Tomlinson for insightful and constructive comments on an earlier version of this paper. He would in addition like to thank participants in the panel ‘Understanding change in advanced economy macroeconomic policy thinking since the GFC: a politics of economic ideas approach’ at ISA in Baltimore, 2017, and at the Department of Politics and International Studies at the University of Warwick’s Annual Research Conference 2017 for helpful comments on and insights into an earlier version of this paper. Thanks go to two anonymous referees for thorough and constructive critical engagement with the paper which helped refine the argument and its central claims. Ben Clift is grateful to the Department of Politics and International Studies at the University of Warwick for granting the study leave which enabled some of this research to be undertaken. Finally, he gratefully acknowledges the support of the Leverhulme Trust Major Research Fellowship (MRF-2017-063) which facilitated the final phase of completion of this manuscript.
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Clift, B. The hollowing out of monetarism: the rise of rules-based monetary policy-making in the UK and USA and problems with the paradigm change framework. Comp Eur Polit 18, 281–308 (2020). https://doi.org/10.1057/s41295-019-00186-1
- Paradigm change
- Political economy
- Economic policy
- Historical institutionalism