Economist Scott Sumner explains why a free-market bias isn’t easily dismissed in analyzing cause and effect in economic history since 1980. He offers some data in support of his hypothesis “that neoliberal reforms lead to faster growth in real income, relative to the unreformed alternative.”
You can’t really “prove” anything in economics, of course. Meantime, you can hardly swing a cat without hitting a pundit who thinks that moving toward “neoliberal reforms” over the past generation was a mistake. The Great Recession is one reason for the recent surge of doubt, even though recessions have been arriving on a semi-regular basis since the beginning of economic time. Changing the economic paradigm doesn’t change this fact. Over the centuries, virtually everything has been tried. And still the contractions keep coming. On the other hand, adjusting incentives that promote capitalism seems to boost output during periods of expansion, at least when measured over long stretches of time.
The burden of proof is one those who argue that less capitalism and more government regulation is a net plus over the long term. Where’s the evidence? There isn’t any, as Sumner’s analysis suggests.