Below is a link to an interview with one of the last 'Chicago Boys', Rolf Luders. He explains both the concepts of Neoliberalism and Social Market Economy, implementation changes in 1982 in Chile and how it differs from the unrestrained 'libertarian capitalism' without/with technically no state and why it does not work according to him. The relevance of this analysis for Calibrated Capitalism is that it sheds light on what challenges can be expected to this model in a liberal democratic context, how to protect it and what kind of risks there are on the outskirts, from competing models, or potential blowback from the rough edges of the earlier variant. This may be especially true for the Eurosystem as it has adopted this moderated social market economy that respects liberal democratic rules, while competing against autocracies and illiberal regimes. You can find the article below or read the excerpts.
https://batimes.com.ar/news/economy/milton-friedmans-last-chicago-boy-has-warning-for-javier-milei.phtml
The most important aspect of the article, is the description between two variants/domains of economics: One is completely unrestrained by rule of law (and democracy) and has caused a bust (in Chile that is), the other one, described as cautious, state-managed is adjusted to rule of law (and democracy) created a sustained level of wealth and better human rights. This variant of Social Market Economy is also an important building block for the Euro. There seems to be a near hermetic barrier between the two variants since the Cold War. Why is there reason to think so? Because so far, every attempt at going 'beyond' rule of law to map fraud, corruption else, it is as if human proportions begin to twist as per my own experience, so is the direction that you are going, almost as if entering a vacuum. I have tried to make this point in academics and elsewhere, so far unsuccessfully.
You can see this distinction clearly when looking at development banks for example, such as EBRD, although it could also be another financial institution:
"Article 49: Freedom of assets from restrictions
To the extent necessary to carry out the purpose and functions of the Bank and subject to the provisions of this Agreement, all property and assets of the Bank shall be free from restrictions, regulations, controls and moratoria of any nature."
This implies that certain assets are above rule of law, behind this near-hermetic barrier. The directions seem to differ between the two domains, with one becoming increasingly illiberal and autocratic, whereas the other/visible one seems to become increasingly liberal/rule of law based. This drift might explain the 2008 Global Financial Crisis, the seeming end of the 'Unipolar' model and emergence of a Multipolar World Order. In the void that is left, by this barrier, journalists and whistleblowers seem to almost consistently (although that is difficult to prove) remain stuck.
When a system follows an illiberal direction, it is non-ergodic, i.e there is a blockage somewhere that will eventually lead to a crash due to incompatibility with human nature. If it follows a liberal direction, it could be considered a free society by the standards of thinkers like Burke or Locke (even Marx may agree to some extent) as it consistently returns to a shared human reality based on rule of law, for an indefinite period (if it is infinite, there is perfect ergodicity, you can find more on this topic by writers like Taleb).
Add comment
Comments