THIS CHAPTER is about the ethics implicit in economic theories and their connection to the European and global North–South divides. It explores how the issue of historical debt and guilt was a core dimension of a moral message, and how this message historically provided preconditions for bridging or deepening the two North–South divides and how the European and the global divides were connected. The time span it considers is the period since 1945.

The framework for articulating these imaginaries of debt and guilt, with their associated moral message, was economic theory. During the period since 1945 there have been two competing economic theories, each with hegemonic status for a specific period, with the 1970s as the divide marking the shift between hegemonies. The theories were Keynesianism and neoliberalism. Although both argued that they were value-free economic theory, they were value-loaded with moral implications.

The prelude below examines the historical connection between economic theory and morality. It will, furthermore, discuss the Keynesian response to the debt and guilt challenge, a response that ended in the attempts to bridge the global North–South divide that emerged in the 1970s. The interlude then investigates the breakthrough of neoliberalism, and its moral appendix, in the 1980s, and the emergence in the wake of neoliberal ideology of a European North–South divide after 2008. The postlude argues for the urgent need to close the connected European and global North–South divides and will suggest the theoretical and value premises on which this could be defended.

Prelude

The illusion of economics as value-free science