Economic Policy, Social Identity and Social Consensus

Abstract The paper discusses neoliberalism’s success in the achievement of consensus despite its negative consequences in terms of growth performance, income distribution and overall precarious living conditions. It contends that there is more to the issue than ideology. Its main contention is that (neoliberal) policy feeds back on how people view the economy, society and themselves. It changes the way they self-identify and their salient identities. It ultimately affects how voters choose policy makers. Over the past decades this process reinforced social consensus for neoliberal policies even though those policies did not make people better off. Contrary to idealized views of democracy, it reflected a reduction of the capabilities that should allow people to choose how to conduct their lives. From a methodological perspective, this suggests that economic policy does not consist in the mere application of theory to reality, in that policy goals depend on an envisaged future that theory helps to understand but cannot fully systematize. From a policy perspective, it calls for a more active role of intermediate collective agents in the determination of those goals.