|
“Capitalism has always evolved through cycles between market‑led and state‑led systems, and we are now partway through another swing – away from neoliberalism and towards a framework of greater state involvement, which we term ‘neofiscalism’.” |
 |
Summary
Economic systems are not static. They evolve in response to shocks, constraints and political choices, and history shows that dominant economic orders eventually give way to new frameworks. In Changing Economic Orders, Insight’s Global Macro Research team argues that the limits of both monetary and fiscal policy are now being tested simultaneously, increasing the likelihood of recurring crises and accelerating a transition away from the neoliberal model that has shaped markets for the past four decades.
The paper sets out a framework for understanding this transition, which Insight terms “neofiscalism”. Governments are playing a more active role in managing economic outcomes through persistent fiscal expansion, industrial policy, trade protection and the growing use of digital money, while central banks retain formal independence but face rising political pressure. At the same time, globalisation is reversing, supply chains are being reshored, and demographic trends are constraining labour force growth across most advanced economies and China.
Drawing on economic history and current policy developments, the paper examines how shifts in money, trade, industrial policy and labour markets are reshaping the global investment landscape. It highlights the growing risks of fiscal dominance, structurally higher inflation and increased cross‑country divergence, as well as the implications for asset allocation, inflation protection and active management. For investors, understanding these changing economic orders is essential to navigating a more volatile, fragmented world and positioning portfolios for long‑term resilience.
