Neo-liberalism and New Labour policy: economic performance, historical comparisons and future prospects

The paper analyses19760/70s inflation, the replacement of Keynesian with neo-liberal economic policy, and the post-1979 decline in inflation. It is shown that the fall in inflation is explained by trends in import prices rather than by switches in economic policy. However, New Labour's conversion to neo-liberalism means that no alternative to it is on political offer, despite returns to pre-Keynesian policy-making, the success of which will depend on price policies based on an understanding of the institutional roots of inflation.