Foreshadowing Change? Theories, Policies, and COVID-19

Abstract: The COVID-19 crisis determined a forceful change in European policy. Despite the theoretical dominance of the mainstream, metrics other than prices were used to decide how to deal with issues such as provisioning, subsidies, and the financial measures they required. This change, which involved both policy makers and the general public, undermined the dominant view that price-centered coordination of the economy constrains socially relevant decisions. It suggests that neoliberal dominance is not robust either in terms of policy priorities or in the way it affects people’s behavior. It also suggests that what a proper economic policy requires is an economic theory that does not merely describe the institutional status quo but foresees its possible change.