The Great Persuasion: Reinventing Free Markets Since the Depression
by Angus Burgin (Harvard University Press, £22.95)
Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics
by Daniel Stedman Jones (Princeton University Press, £24.95)
By now, the phrase “too big to fail” is a household term for arrogant financial institutions. But it also describes the neoliberal economic paradigm that has fuelled that arrogance for decades: the unwavering faith in laissez-faire and the devotion to deregulation. Since the 1970s, such thinking has swayed policymakers on both sides of the Atlantic and on both sides of the political aisle. Ronald Reagan’s famous proclamation that “government is not the solution to our problem; government is the problem” has been accepted in much of Westminster and Washington, even by many liberal politicians.
Although Margaret Thatcher and Ronald Reagan tend to receive the credit for ushering in supply-side economics, Labour prime ministers Harold Wilson and James Callaghan also prioritised the fight against inflation over the fight against unemployment and enacted numerous spending cuts. In the United States, the deregulation of the banking and transportation sectors began with Jimmy Carter, Reagan’s Democratic predecessor. Twenty years later, the Labour prime minister Tony Blair and the Democratic president Bill Clinton devised the “third way”—an attempt at reconciling the efficiency of neoliberal economics with a commitment to social justice.