‘Neoliberalism’ – A Term Both Ubiquitous and Ill-Defined – is an Evolving Body of Market-Driven Ideas. Or a Conspiracy by Elites to Torment the Poor…Posted: February 10, 2014
Spontaneous Order: Looking Back at Neoliberalism
Tim Barker writes: “The owl of Minerva,” Hegel famously wrote, “flies only at dusk”: historical events can be theoretically comprehended only in retrospect. Is this the case with neoliberalism? A term ubiquitous in the academy but scarcely used outside it, the concept is difficult to define with precision. A common shorthand identifies it as the economic and philosophical ideology behind the Reagan-Thatcher revolution; it is also often agreed that this ideology contributed somehow to the financial crisis of 2008. Now, with the recession technically over but recovery still ambiguous, two recent books attempt to describe neoliberalism’s historical origins and explore its current political implications.
by Johanna Bockman
Stanford University Press, 2011, 352 pp.
Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics
by Daniel Stedman Jones
Princeton University Press, 2012, 432 pp.
In Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics, Daniel Stedman Jones charts the rise of neoliberalism, which he defines as the “coherent, if loose, body of ideas” that underwrite our contemporary “market-driven society.” He begins with the intellectual biographies of three exiled Central European thinkers—Ludwig von Mises, Friedrich Hayek, and Karl Popper—who challenged the industrial West’s consensus around social welfare programs, full employment, labor unions, and state intervention. This first, émigré generation (joined by kindred Americans and West Germans) were “neoliberal” in their opposition to central planning, but also “neoliberal” because they sought a reformed liberalism for the middle of the twentieth century, not a simple return to the laissez-faire of the nineteenth. Hayek’s Road to Serfdom, for example, countenanced significant departures from laissez-faire, including universal health care.
Stedman Jones shows that as neoliberalism developed it became “much more simple and reductive”—and also more politically practical. Second-generation figures such as Milton Friedman in the United States and Keith Joseph in the United Kingdom were buoyed by grassroots New Right activism and the patronage of well-organized “business conservatives.” Through transatlantic foundations and colloquia, neoliberal ideas—lower taxes, less regulation, a focus on monetary rather than fiscal policy—spread to politicians and public intellectuals. When the economic crisis of the 1970s confounded Keynesian orthodoxy, neoliberalism offered a coherent alternative attractive even to center-left politicians. By the 1980s the tentative reforms of Jimmy Carter and James Callaghan were succeeded by more strident right-wing governments, and the neoliberal triumph seemed complete.
While he clearly conveys this central narrative, Stedman Jones’s analysis is sometimes superficial. He too often presents economic theory through long quotation rather than synthetic paraphrase, and he lacks the confidence to adjudicate between competing economic claims. This almost total agnosticism keeps him from discussing the deep causes of the crucial 1970s downturn or locating the precise failures in Keynesian thought. He lazily glosses Keynes’s saying “in the long run we are all dead” by repeating the canard that Keynes was indifferent to “long-term requirements.” In fact, as economist Brad DeLong has written, the phrase in context is a technical point about the quantity theory of money and “has absolutely nothing to do with attitudes toward the future.”
Absent a deeper economic analysis, Stedman Jones offers a morality play about moderation, formulaically applicable to any alleged extremism. Neoliberalism is a “faith-based policy” whose exponents subscribed too readily to the lofty abstractions of a total worldview. It follows that neoliberalism’s poisoned fruits—like its nagging tendency “to affect the most vulnerable members of society in the harshest ways”—“probably weren’t . . . . intended effects.” This impulse to acquit neoliberals dovetails with a hostility to Marxists, who are dismissed for believing that neoliberalism emerged as a “fully formed” capitalist conspiracy “to torment the poor.” This is a caricature: David Harvey, the leading Marxist theorist of neoliberalism, describes its decades-long coalescence as “a series of gyrations and chaotic experiments.” In hastily dismissing Harvey, Stedman Jones avoids dealing with his crucial thesis—that neoliberalism was not driven by “the simple power of a firm faith in markets,” but by the dynamics of class conflict….
- Thank You Alex for the Corrective to Krugman and Warsh (coordinationproblem.org)
- E.J. Dionne Jr.: Why we’re on the road to paralysis (lacrossetribune.com)
- Classical Liberalism and the Austrian School (joseywales1965.wordpress.com)
- A Keynes for all seasons (economist.com)
- Blame gridlock on the Austrians: E.J. Dionne Jr. (oregonlive.com)
- IN PRINT: Minding the Market (bookforum.com)
- The Great Disruption in Economic Thought (coordinationproblem.org)
- Hayek Makes Brad DeLong’s 20 Books that “Have Shifted the Ground on Which I Think” (economicpolicyjournal.com)
- How Do People Read Hayek? (coordinationproblem.org)