Few zombie ideas return as persistently as the claim that right-wing governments are good for the economy, whereas progressive administrations mismanage it. Yet this belief reflects a conception of economics that ignores the sustainability of growth and conservatives’ actual record.
Indeed, in country after country, the neoliberal experiment of the past four decades widened public deficits, deepened inequality, produced recurrent financial crises, and left economies more fragile. And time and again, left-wing governments had to repair the damage.
Yet segments of the left have surrendered the banners of growth, fiscal sustainability, and price stability to conservatives, even though the evidence shows that progressives have defended these objectives better. Such unforced errors have eroded the left’s credibility with citizens who simply wanted to work, start a business, and improve their lives.
Our own two governments have taken the opposite approach. In Brazil, following the defeat of a right-wing government, President Luiz Inácio Lula da Silva’s administration returned to the path of fiscal responsibility and social justice that the previous government had abandoned.
After increasing transparency, expanding social policy, and rescinding tax breaks that disproportionately benefited large corporate groups, the results speak for themselves. Unemployment is at a record low, household incomes are rising, and millions of people are leaving poverty behind.
Similarly, in Spain, Prime Minister Pedro Sánchez’s government has secured one of the highest growth rates among major advanced economies for three consecutive years, while also bringing the deficit to its lowest level in nearly two decades. Employment is at record levels, with Spain accounting for five out of every ten new jobs created in the eurozone, and structural reforms are improving job quality, productivity, and innovation.
The lesson is the same in both cases. With the right mix of bold and ambitious policies, fiscal responsibility, growth, and social-development programmes do not contradict one another; they are mutually reinforcing. This is the alternative path that the world needs as policymakers increasingly put narrow market and financial interests ahead of the collective good.
The Global Council on New Economics for the 21st Century, a forum of leading economists working to advance this model of progressive economics, was established to design and promote sound policies for a world in transformation. Hosted initially by Spain, the Council will hold its first in-person meeting in October—a gathering that promises to be a key step toward leaving behind the orthodox economics that have failed the majority of the world’s people.
That failure must not continue. The three great transitions that are now underway—demographic, ecological, and digital—demand economies that are fairer, more productive, more resilient, and more sovereign. The demographic transition, for example, is straining social protections on both sides of the Atlantic. Spain has one of the world’s oldest populations, and Brazil is beginning to see the end of the demographic dividend that powered its development.
The right’s answer to this challenge is to cut benefits, shifting the cost onto those least able to bear it. Our answer is to raise productivity and build fairer, more progressive tax systems. Brazil has just approved an income-tax reform that exempts 15 million lower- and middle-income workers, while imposing a minimum effective contribution on very high earners. Similarly, Spain taxed the windfall profits of energy companies and banks to finance its response to the inflationary surge after Russia’s 2022 invasion of Ukraine. It has also pioneered a levy on large fortunes.
With the ecological transition emerging as the foundation of 21st-century development, Brazil holds unmatched strategic assets that include the world’s largest tropical forest, its largest freshwater reserves, and a strong renewable electricity mix. Lula’s administration has made protecting the Amazon a pillar of Brazilian foreign policy, not to renounce development, but to guarantee that development can be sustained.
Spain, for its part, is a global leader in clean energy. Renewables generate more than half its electricity, and the country ranks second in the world for new investment in the sector. Its reduced dependence on hydrocarbons has already cushioned households from the impact of the war in Iran and lowered electricity costs for industry.
Finally, the digital transition will increasingly shape future generations’ living conditions. Yet as matters stand, a handful of firms control the technological infrastructure on which our economies and democracies run. As Pope Leo XIV has warned, this concentration carries serious risks of dehumanisation, because tech companies optimise for shareholder returns rather than for social cohesion or democratic integrity.
That is why Brazil is combining platform regulation with support for data centres and a risk-based framework for AI, and it is why Spain has proposed barring access to social media for those under 16. Both are demanding greater responsibility from the large platforms and advocating AI that respects dignity, autonomy, and equity.
The world we have today is not the one we set out to build. War and extremism have returned, and multilateralism is being dismantled as major powers pursue unilateral tariffs, wield market access as leverage, and replace diplomacy with threats. This harms everyone.
As finance ministers, our responsibility is to insist on settling differences between countries through dialogue and law. The recent signing of the EU-Mercosur agreement—the largest such deal in history by combined GDP, and one in which both our governments played a central role—is a concrete expression of that commitment.
Lula has sought to keep channels open with all players, refusing automatic alignments, and affirming that the Global South has a voice of its own. Equally, Sánchez has defended international law against unilateral action and urged the European Union to pursue greater strategic autonomy. Both governments have shown that progressive policies are not only good for the economy; they also lead to more stable and just societies.
Some of us still prefer the logic of law to the logic of force, multilateral governance to fragmentation, and digital sovereignty on behalf of ordinary people to concentrated technological power. The true measure of progressivism will be found not in speeches, but in better working conditions, affordable housing, and access to an education that will open real opportunities. Now more than ever, people need to see their own governments standing with them.
Durigan is Brazil’s Finance Minister. Cuerpo is Spain’s Minister of Economy, Trade, and Business. ©Project Syndicate