One thing a lot of classical liberals fail to understand is that the left is far more sophisticated about markets than they think. The meliorist left sees markets in a mostly benign light. And the alterglobalization, participatory left has a fundamentally different, solidaristic orientation that can't be "disproven" by arguments from inefficiency. But I do think this Alesina-Giavazzi essay is useful nevertheless for all the reasons Free Exchange explains better than I can.

It is particularly important to understand that a roughly similar set of institutions mean very different things in different contexts. For example, the kind of labor market protections that seem benign (wrongly, in my view) in Western Europe are clearly pernicious in a place like India or even Brazil, where the formal sector is a far smaller partof the broader economy. That's why an attack on "neoliberalism" writ large is so flawed: "neoliberalism" can, in an essentially feudal economy, be a destabilizing force on behalf of the very poor. And the "neoliberal" structural reforms pursued by the Nordic economies have preserved the most valuable parts of the social-democratic inheritance.

This is part of the reason why I find Roberto Unger very interesting. Smart liberals tend to dismiss Unger and his "superliberalism" for the decent reason that it is highly, eccentric, deliberately obscure, and, well, illiberal: if the rule of law is the sine qua non of a liberal society, a context-smashing "destabilization branch" is clearly illiberal. But Unger is smart enough to know that in the Third World, a "centrist" politics is often more radical (in the best sense) and pro-poor than a "social-democratic" politics that represents the interests of a narrow, entrenched, privileged minority of formal sector employees.

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