The consequence is that
monetarism has become a recipe for slow growth and high unemployment.
If Friedmanite
monetarism was anything, it was naive about political economy.
1) aptly sums up the movement: "Market
Monetarism is the first economic school to be born out of the blogosphere.
One reason for not recounting or criticizing Jones's broader history of neoliberalism--and especially of its most prominent feature, monetarism--is that his account is thorough and, as far as I know, largely error-free, as is his case study of
monetarism's embrace on both sides of the Atlantic.
Instead, as Jones writes, "the terrible prevailing economic conditions ensured that
monetarism, deregulation, and trade union reform acted as Trojan horses for a more polemical neoliberal faith in free markets."
This case, therefore, did not confirm objections of
monetarism advocates who claim that the effects of monetary-policy measures on interest rates in the financial markets are ambiguous.
Congdon also has a lot to say about the relationship between monetary and fiscal policy and broader questions about the role of government: "As its critics understood,
monetarism was not--and is not--politically neutral.
The old heavy industries - coal, steel, shipbuilding - were being sacrificed on the altar to
monetarism.
This took the form of a public crusade with three, related components: first, a diagnosis of the problem, that prioritised inflation over unemployment; second, the promotion of
monetarism as a common-sense solution; and third, an overarching narrative, that pinned the blame decisively on her opponents.
Keynesian macroeconomics was already being marginalised by
monetarism, which would itself rapidly succumb first to New Classical macroeconomics and then to the New Neoclassical Synthesis, the latter involving the virtual liquidation of macroeconomics in favour of representative agent microeconomics.
The USA is going for a Keynesian growth model, while the UK is applying
monetarism and cutting back on debt (you've probably noticed).
What reminds me of Margaret Thatcher is that in her time she declared that there was no alternative to the policy she introduced of
monetarism.