While the mid-to-late 1970s saw the rise of monetarist liberalism and the 1980s saw a dramatic about-face by Mitterand, who under massive pressure from French capital quickly switched from a socialist vision that had brought him to power to fully fledged austeritarian neoliberalism, it seems the 1990s were the period when Keynesian demand-oriented economics got entirely ousted by neoliberal supply-side thinking as the dominant economic paradigm in all leading Western nations.
The point is that mass unemployment was at very high levels in many European nations and was rising between 1993 and 1994 in most.
It coincided with a major recession in the early 1990s, which impacted on most nations. However, while, for example, the US began growth again in 1993 and Japan endured its massive property crash at the time, Europe stayed mired in stagnation with elevated unemployment rates.
At that point it was obvious that aggregate spending was insufficient and output gaps were large, as the next graph shows.
A lot of my own research at the time clearly demonstrated that the rising unemployment was driven by the insufficient aggregate spending.
However, that view conflicted with the growing Monetarist (neoliberal) orthodoxy at the time, which was intent on denying the relationship between spending and output and unemployment.
This was the period where supply-side biases began to dominate. Where mass unemployment was no longer constructed as a sign of a systemic failure of economies to generate enough work but, rather, as a sign that the unemployed, themselves, were deficient in one way or another – lazy, not prepared, not willing, priced out by trade unions and minimum wages, and all the rest of it.
Emphasis added.
Kurze deutsche Zusammenfassung: Wann hat sich die neoliberale Wende zugetragen? Mitte bis Ende der 1970er Jahre wurde der ohnehin verwässerte Keynesianismus à la Hicks vom neoliberalen Monetarismus des Milton Friedman abgelöst. In den 1980er Jahren erfolgte die ebenso rasante wie dramatische Kehrwende des François Mitterand, der die sozialistische Vision, mit der er an die Macht gewählt worden war, unter dem Druck der französischen Wirtschaft im Handumdrehen gegen eine neoliberale Austeritätspolitik vertauschte. Der intellektuelle Siegeszug des Neoliberalismus vollzog sich dann in den 1990er Jahren als der Widerstand gegen die Angebotsökonomie aufhörte und das zuvor noch oberste wirtschaftspolitische Ziel der Vollbeschäftigung von praktisch allen Ökonomen aufgegeben wurde.
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