The shock of the neoliberal

How did neoliberalism triumph?

by James McAuley / January 30, 2013 / Leave a comment

Margaret Thatcher and Ronald Reagan are two of neoliberalism's most important acolytes. How did laissez-faire economics overturn the old consensus? (photo: Robert Huffstutter)

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.

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Comments

Francien L
January 31, 2013 at 05:48
Great article. Although I haven't read the books myself (I will do), the key points that I agree with in this article was the power of the PR propaganda and how some key words were used to stoke terror into the hearts of (mostly) Americans, such as 'socialism' which thanks in part to McCarthyism, convinced Americans that even socialist governments in western democracies (as oppose to dictatorships), were 'evil' and dangerous. It therefore wasn't difficult to persuade people that neo-liberalism was the opposite of socialism and meant 'freedom' in the broadest sense. And if neo-liberalism meant freedom, socialism and liberalism (as the Americans call it) meant oppression and tyranny. The madness of this, is that the origins of socialism was precisely to create the freedom from the masters, rulers and lords of poverty who who had wealth, authority, control and power over others. If we keep going like this, we are more likely to end up looking like a third world country with the majority of people living below the poverty line, and a minority fighting each other for absolute power.
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Gillian Fraser
January 31, 2013 at 16:56
"In 2010, the Conservatives won the most votes in the British general election and the Tea Party swept the Congressional elections in the US." Yes but the Conservatives failed to "win" the election and, after 13 years in opposition, that is a significant rejection. Even though the Coalition has pursued a neoliberal agenda, it is reassuring (and equally disturbing) to remember that the Conservatives failed to convince enough people to take power on their own. The voters will no doubt let the Libdems know what they think of them at the next General Election There are other signs that neoliberal politics are on the wane. First, the re-election of Obama (I know, I know - but it's a start) and, secondly, the rise of movements such as Occupy.
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ganpati23
February 7, 2013 at 01:56
Read Cain and Hopkin's 'Gentlemanly Capitalism'. It's been going on a lot longer. (They say since 1688, and I don't know enough about the preceding period to speak up. But their analysis of 1688-post ww2 makes sense.) "the third phase—still with us—“was driven by the advance of an agenda of market liberalisation and fiscal discipline into development and trade policy.”" They reckon that happened by 1850 (after the repeal of the Corn Laws in the '40s - though had been building up after 1815. The ideas pre-dated 1815 but the wars meant they had to wait.) 1688-c.1850 - City finance in league with the landed interest. c.1850-> City finance in league with manufacturing and industry. Please read it. (Google is your fr- well, it's not, but you can get the articles as pdfs if you use a search engine.) You're fighting just one head of the Hydra. The symptoms, not the cause. They've been doing it for centuries. (btw, in case you doubt, this isn't some Dave Spart nonsense, this is one of the major works on the economics of imperialism. imo, they seem to quite like it 'cos "our" gentlemanly capitalists were better that "their" gentlemanly capitalists. But by God do they make the high-finance game clear. I used to think the Glorious Rev, C.J. Fox, the Great Reform Act, the People's Budget etc had made this country better. But we've just been manipulated serfs all along.)
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