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.
The fundamental strength of the neoliberal paradigm was confirmed during the financial crisis of 2007-8. Did the apparent failure of neoliberal economics cause its adherents to question their beliefs? Did public opinion in either society call for a change in direction? Hardly. In 2010, the Conservatives won the most votes in the British general election and the Tea Party swept the Congressional elections in the US. Even after self-immolation, it seems, neoliberalism still holds court. Two comprehensive new intellectual histories—Angus Burgin’s The Great Persuasion and Daniel Stedman Jones’s Masters of the Universe—attempt to explain that enduring power.
The primary emphasis of Burgin’s excellent book is the Mont Pèlerin Society, the group of international economists and intellectuals assembled by the neoliberal prophet Friedrich Hayek in Mont Pèlerin, Switzerland in 1947. Hayek had recently published The Road to Serfdom, his 1944 polemic against the totalitarianism…