Déjà Vu All Over Again: The "New" Economy in Historical Perspective

Abstract

The American public has been bombarded with the idea that the introduction of information technology created a "New Economy" in the U.S. in the 1990s. It is claimed that "free-market" institutional changes are required to take advantage of the new information technologies, and that combining those institutional changes with the new technology has ushered in a new era of unprecedented prosperity. We take issue with those claims in this paper. Our central thesis is that the institutional changes associated with the New Economy are a veiled attack on trade unions and working people. These changes are not new, they are not required by the new technology, and they have not led to unprecedented prosperity. Moreover, the free market has not brought prosperity in the past, either. During periods in which the free market has predominated, the U.S. economy has performed relatively poorly and exhibited considerable instability. Throughout U.S. history, free-market, anti-labor regimes have alternated with periods in which government and workers have restrained the worst excesses of the free market and established basic rights and protections. Viewed in historical perspective, the institutional structure of the New Economy may well turn out to be a relatively temporary phenomenon.