Investments in Societal Complexity, Diminishing Marginal Returns and Neoliberalism: A Note

Abstract

"Investments in Societal Complexity, Diminishing Marginal Returns and Neoliberalism: A Note" discusses the switch from "Keynesian Fordism" to "Neoliberal Financialization" as the organizing model for economic policy from the 1970s on, and the consequences for the world economy as understood via the lens of Joseph Tainter's theory regarding societal investments on complexity passing a point of diminishing returns and decreasing societal slack. Specifically it argues that as the Fordist post-World War II economic model ran into diminishing returns, policymakers attempted to improve the trend via neoliberal as a way of pursuing efficiencies, and eventually the deeper reorganization that was Neoliberal Financialization--which process actually worsened the trend. Specifically, while it brought an extreme increase in the complexity of economic life (in the hypertrophy of finance, rising trans-national flows of investment and trade, and overall financial and economic integration globally), all the complexity went along with a continued decline in returns and eroding societal slack (with major states deindustrializing, economic growth rates declining, debt-to-GDP ratios rising, fiscal space shrinking, etc.), leaving it a failure in the end.