Philip Pilkington: The Origins of Neoliberalism, Part II – The Americanisation of Hayek’s Delusion

By Philip Pilkington, a writer and research assistant at Kingston University in London. You can follow him on Twitter @pilkingtonphil

Shared psychotic disorder, or folie à deux, is a rare delusional disorder shared by two or, occasionally, more people with close emotional ties. An extensive review of the literature reveals cases of folie à trois, folie à quatre, folie à famille (all family members), and even a case involving a dog.

– Medscape Reference

In the previous part of our series on the origins of neoliberalism, we saw that the vigour mustered to start the movement on its way was generated by an enormous repression undertaken by the Austrian political philosopher Friedrich Hayek. When Hayek saw his intellectual position, a position in which he had invested most of his emotional energy, falling to pieces due to contemporary economic events, political happenings and theoretical debates, he opted to seal himself into his own mind and reject reality. Instead he began pushing a political philosophy and a metaphysics that he set to work constructing and disseminating. In this part of the series we explore in more detail the fruits of his labour in America.

In the following two parts of the series we draw extensively on the excellent work which a number of historians of science have undertaken and published collectively in the volume The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective. We cannot recommend enough that the interested reader searches out this volume for more details of this extremely important institution which, in a very real way, has come to shape our political discourse today.

The Road to Serfdom: American Edition

A major concern of the American members of the Mont Pelerin Society, most of whom were based out of the now infamous Chicago School of Economics and Law, was to make Hayek’s delusion more palatable to the American public. During the Second World War many New Deal institutions had solidified and become popular with the public and after the war the majority of Americans did indeed think that their country, while definitively capitalist, was nevertheless one in which the government played a rather large and constructive role.

The political right found themselves completely flummoxed by such a situation. More practical men, like President Ike Eisenhower, jumped on board, while fringe elements, like Joe McCarthy, fled into paranoia, attacking many prominent liberals as Communist agents. Already in the wartime planning era of the 1940s, when Keynesianism loomed large in America, those economists at the Chicago School and elsewhere in the US who had read and absorbed Hayek’s delusion knew that they needed to change the terms of the debate. But how they were to do this proved a daunting question.

In 1945 Hayek conceived that there should be a sister book of The Road to Serfdom written for an American mass audience. Hayek and the Chicago School economists knew that the original was too refined for American tastes. After all Europeans like their propaganda filled with lofty philosophical notions, while Americans are more content with sound bites that chime with certain trigger words that have been circulating since the revolution of 1776. It is the evolution of what effectively became the American edition of The Road to Serfdom that Philip Mirowski and Rob Van Horn explore in their paper “The Rise of the Chicago School of Economics and the Birth of Neoliberalism,” included in the volume mentioned at the beginning of this piece. The evolution of this book was particularly important because it gave rise to a specifically American strain of neoliberalism.

The problem for the Mont Pelerin members was basically as follows: classical members of the Chicago School, like the economist Henry Simons, were, like Hayek, fairly tied to certain ideas that existed in the older liberal school of political economy. Among these ideas was the notion that monopoly and oligopoly were twin evils that conspired against the public and caused inefficiencies in the market. Simons was arguably more tied to this idea than Hayek mostly because Hayek had developed, as we have seen in the previous part of this series, a pathological obsession with planning as it related to forms of government. For this reason Hayek thought that most forms of monopoly were the result of government planning. But whatever his views were, the implications were clear: this sort of ideology was not going to fly in an America that was now dominated by large corporations with substantial ties to the state.

Mirowski and Van Horn make this case apropos of the Volker Fund, a charitable foundation set up in 1932 by home furnishings mogul William Volker, which was then converted into a bankroller of libertarian propaganda by Volker’s nephew Harold Lunhow upon the former’s death in 1947. They write:

The politics of postwar America presumed not only a powerful state, but also a configuration of powerful corporations whose international competitors had mostly been reduced to shadows of their former selves. In promoting “freedom,” they were primarily intent on guaranteeing the freedom of corporations to conduct their affairs as they wished. Thus, the Volker Fund was not interested in bankrolling a classical liberal economic position resembling that of Henry Simons, for it did not adequately correspond to their objectives. American corporations did not fear concentrations of power and generally favored the existence of a powerful Cold War state. It is our contention that the Volker Fund pushed for a reformulation of classic liberalism in the American context to conform to its Cold War antisocialist agenda. The participants in the Free Market Study [an offshoot of the Mont Pelerin Society], and even eventually Hayek, would just have to learn to adjust to the emergent characteristic doctrines of neoliberalism.

The money men loved Hayek’s message that government interference and economic planning would lead to tyranny, but they were not so keen on his purist free market ideas. Fortunately for them, however, Hayek himself was less concerned with constructing a pure free market system than he was with fighting the ghost of what he called “socialism”. Thus a union was accommodated and the child of this marriage was to be Milton Friedman, who would pen the American edition of The Road to Serfdom, which came to be called Capitalism and Freedom.

Before turning to this, however, we should briefly highlight this emergent anti-socialist trend – or, more accurately, this ideological trend constructed against what a fringe group of people thought to be “socialism”. It is this we hear when we stick our ears into the right-wing echo chamber in America today. Many are perplexed with how right-wingers and vulgar libertarians completely change the meaning of the English language and denounce centrist and centre-left politicians and commentators as “socialist” when these people have no interest in having the state seize control over the means of production – which is the definition of the term “socialism”. Now perhaps we can more clearly see that the roots lay buried in the dominant aspect of Hayek’s delusion; which was the aspect taken up and bankrolled by certain right-wing corporate interests in the 1940s and 1950s.

Consolidation of the American Neoliberal Doctrine

As the American Mont Pelerin Society began to accommodate their corporate bankrollers, the discourse of American neoliberalism proper began to crystallise out from Hayek’s original delusion. The state and big corporations were no longer to be feared, as they may have been by classical liberals. Rather they were to seen as guardians of the neoliberal order. Every society needed its networks of power and the goal now became to ensure that these networks of power were populated by people who were initiated into Hayek’s delusion.

This made neoliberalism a far more potent political ideology than the purely negative anti-government sentiment implicit in Hayek’s The Road to Serfdom were it left standing alone. Here was an ideology that politicians could buy into because it secured them a place in the schema. They were to become the handmaidens of corporate interests and were absolved from any need to institute proper government reforms – after all reforms were evil. Thus the neoliberal doctrine gave the politicians a very easy job and, most importantly, one from which they could largely absolve themselves from blame should the situation go awry. After all, they were not in charge – the free market was. Again, Mirowski and Van Horn summarise this situation well:

The starting point of neoliberalism is the admission, contrary to classical liberalism, that its political program will triumph only if it acknowledges that the conditions for its success must be constructed, and will not come about “naturally” in the absence of concerted effort. This notion had direct implications for the neoliberal attitude toward the state, the outlines of what they deemed a correct economic theory, as well as the stance adopted toward political parties and other corporate entities that were the result of conscious organization, and not simply unexplained “organic” growths. In a phrase, “The Market” would not naturally conjure the conditions for its own continued flourishing, so neoliberalism is first and foremost a theory of how to reengineer the state in order to guarantee the success of the market and its most important participants, modern corporations. Neoliberals accept the (Leninist?) precept that they must organize politically to take over a strong government, and not simply predict it will “wither away.”

Again, it is worth stepping out of our narrative here for a moment and pointing out that this makes sense of where we are today regarding the US political scene. On the one hand, we have the Democrats who largely support the neoliberal agenda both in public and behind the scenes, although they still defend the remnants of a welfare state which largely promote dependency on elites. On the other hand, we have the Republicans who support the neoliberal agenda behind the scenes but sell it in public by peddling Hayek’s original delusion to attack the now crumbling remnants of a welfare state which was originally designed for a full employment economy, and which has now in the era of neoliberalism degenerated into a minor tyranny thus providing a false microcosmic confirmation of Hayek’s delusion.

The American edition of The Road to Serfdom took some time to appear. This was because, as we have said, there was a large amount of consolidation going on in the American segment of the neoliberal movement. It took a while for various political realities to be integrated into the doctrine to make it more palatable for elites. Finally, however, in 1962 Milton Friedman published Capitalism and Freedom.

Capitalism and Freedom is a vulgar work. No more nor less propagandistic than The Road to Serfdom, but certainly sanitised and written for a distinctly different audience. Friedman was soon to go on and create monetarism, which would give policymakers a positive program for how to run the economy, but for now he was content with consolidating neoliberalism as a doctrine and ensuring that American elites were not put off by the more radical musings of Hayek. Friedman, in sterile prose, writes of every societal institution as if it were either a natural market or an institution that might encroach on otherwise efficient markets – a highly simplistic “good versus evil” narrative couched in pseudo-scientific terminology. More importantly still, he chalks up monopoly and corporate power as being due to nefarious government interference and even then he dismisses this by evoking his infamous “as if” approach to methodology, thus neutralising the problem altogether:

I have become increasingly impressed with how wide is the range of problems and industries for which it is appropriate to treat the economy as if it were competitive.

And so the road was paved for the American version of neoliberalism which many live under today. Hayek’s delusion had begun to spread in the US by the 1960s. First among a few emotionally and ideologically close individuals (for ideological proximity is the next best thing to emotional closeness), but soon it was to be spread to the population at large by a charming actor named Ronald Reagan who would prove a master at emotional manipulation. Folie à deux, folie à trois, folie à quatre and so on.

In the next part of the series we will explore the emergence of the European version of neoliberalism, also born from Hayek’s delusion, but more accommodative to the trade unions that wielded, and continue to wield, significant power in Europe. This can be read as a spreading of Hayek’s delusion among the institutions of the centre-left, which would then become a steadfast pillar of neoliberalism and a bulwark against a phantom socialism.

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    1. skippy

      Why do to trolls never learn?

      “Was there even an argument here?” – Mccartbi

      Skippy… I can read one in the post, where your comment lacks even the slightest component of which you question the author… Saccharine Drivel methinks… Ugh indeed!

      1. jake chase

        Although less expensive, its a variant of super rich people hiring intellectuals to put a shine on bankrupt ideas, hoping to confuse well meaning people who think all college professors are honest, which is I think the point of the main post, although I am not certain.

      2. Jim

        The argument starts with an ad hominem attack, ‘he opted to seal himself into his own mind and reject reality’, this is unfortunate. Ad hominem attacks are ultimately self-defeating. They are equivalent to admitting that you have lost the argument.

        1. Philip Pilkington

          Oh dear… someone didn’t read the first part. Or they didn’t understand it. Probably the former. And by the way, a psychological evaluation is not an “ad hominem attack” that means the person making it “loses the argument”. By that criteria if a psychiatrist diagnoses a person as schizophrenic and asks the courts for a sectioning order he would ultimately lose the argument — and the case — because his attack was “ad hominem”.

          Internet arguments. It’s like watching a monkey jump around a cage. But with more platitudes and stupidities.

          1. ScreenName48

            Phil seems like an angry guy, wrapped up in his own world of pseudo-intellectual claptrap. That Yves enables him by giving him a platform is a shame, and calls into question her own decision making and ability to recognize obvious sophistry when it is deposited on her blog every week.

          2. skippy


            Oldest trick in the troll book, question the hosts validity without substantial argument, inferring via the usage of a plethora of insinuating adjectives and verb. That and the not so long ago, I give you money, where my value trope.

            Skippy… neoliberlism is an attempt to do what even the most aggressive purveyors of wealth and power in history could not… internalize their own delusions – of self – into a religion for – all –

          3. ScreenName48

            Skippy, when an argument is 100% sophistry, what is there to argue with? If there was an actual argument in what Phil wrote, I couldn’t find it. You want an argument? Here’s one:

            “Taxation” is theft. Theft is always immoral. Therefore, “Taxation” is always immoral.

            The current system only functions because of the threat of violence (to use their fiat “money”, to pay the wages they deem appropriate, etc.) Therefore, if you remove the threat of violence, everything immediately collapses.

            The reason Phil, MMT, and all the rest of this is sophistry (“making the worse argument appear the better”) is because it is just a bunch of idiotic theories and rules and explanations of how people act when you point a bunch of guns at them and tell what they may or may not do, economically speaking.

            Tell my why I’m wrong, Skippy. Make an actual argument, if you can. I’m fairly certain Phil cannot.

          4. jonboinAR

            1) You’re only prevented ultimately from entering my house and taking all I have by the threat of violence. So “the threat of violence” is no argument to prove that something (say, the sanctity of my house) is illegitimate.

            2) I think immorality is part of the definition of “theft”. So that premise, I guess (being no logician), stands. So the argument as to whether taxation is immoral depends on whether one chooses to call it theft. I say nein. “Render unto caesar what is due caesar.”

            Where have you gone, FBeard (Dimaggio)?

          5. enouf


            to your 1st point;

            It’s all about “the state” having a *monopoly* on the initiation of aggression and use of force. The ideology known as “the state” exists as a Religion within the unsound minds of the delusional brainwashed masses whom choose to remain in denial due to fear. It’s *not* about self-defense and protection of one’s property and welfare of their family, as you imply, What makes “the state” illegitimate and immoral is that it can only exist and thrive through coercion, aggression and theft.

            ..which segways nicely into your 2nd point there;

            We are each our own little caesar{-ette}s. All of us – individually, uniquely, ..with the liberty to choose for ourselves how we want to live. No one is above another, nor should one want to place another above themselves — lest should they choose to, that is their right to do so, and none of anyone else’s business, (especially not the Government’s). So long as their freakish beliefs and behaviours do not involve aggressing upon another, then it is nobody’s business.

            Most of us would choose _not_ to place our lives, our liberties, our pursuits of happiness in the hands of bureaucrats and technocrats (or worse) — to have them tell us right from wrong, to aggress upon us should we not *behave* and remain *obedient* debt slaves; to conform to their own insane rules. One major problem is we have no choice; we cannot simply opt-out,

            Anyways, way downthread skippy posted some good stuff pertaining to neo-liberalism, but i fail to see how he, or anyone else thinks that a liberty-minded spirit would agree with neo-liberalism (or neo-conservatism for that matter) in any way shape or form. Both are based on Aggression as its root foundation, and neither can exist without a monopoly on the use of force. (heck, i’d say all ‘isms’ fall under this umbrella)


        2. skippy

          “They are equivalent to admitting that you have lost the argument.” – Jim

          Jim, If I see someone hitting a stick of TNT with a hammer and call them an idiot – first – and then lay out why their an idiot…

          Skippy… you can’t dismiss an entire post by signaling out the opening emotional broadside. Especially when the economists mind is sort of a reality projector and not reality observer. And as a quasi religion the term falling from the sky is apropos, as that is where most religions begin, the sky in the head.

    2. MRW


      Spare us. If you need what Pilkington is saying in more entertaining format, watch Adam Curtis’ series The Trap. You can hear it from Hayek’s own mouth.

  1. jake chase

    When I obtained my degree in Economics (1964), nobody in the department except a single reactionary kook (whose family then owned most of West Virginia and probably still does) ever expressed the slightest disagreement with Keynes (or Samuelson, his popularizer). When this one poor ‘conservative’ spoke people just rolled their eyes and ignored him.

    Ricardo, Marx, Veblen, Hayek and Friedman were names nobody ever mentioned. It was a truly dismal major, in which all the problems appeared to have been solved.

    1. digi_owl

      Sadly, what Samuelson popularized was a sanitized version of Keynes. About the only thing that was anywhere near proper Keynes was the notion of government counter-cyclical spending, the rest was classic political economy with a fresh coat of ink…

      1. jake chase

        Exactly right. Samuleson turned economics away from institutional analysis and toward mathematical gymnastics on models grounded in fictitious assumptions and the collection of flawed data. Economists are still doing that, which is why nobody should pay any attention to over ninety percent of them.

        Like Freud, Keynes has been the victim of careerist populizers and opportunists. Nobody reads the original, but everyone believes they know all about it.

    2. Susan the other

      The Rockefellers were so American they probably genuinely thought they could have it both ways, since politics and economics are like a Necker cube. I mean, commissioning Diego Rivera to do the mural for 30 Rock?

  2. jake chase

    IMHO, the most influential unread book in the history of economic thought is Friedman (and Schwartz), Monetary History of the United States.

    It is not only unread but unreadable, and for those who persevere it is utterly unrewarding, because it is theology, not science.

    1. Systemic Disorder

      Indeed. Neoliberalism as a whole is a theology, one that serves a purpose — it does not simply fall out of the sky as Philip Pilkington writes. There is no such thing as political democracy without economic democracy, the latter of which is impossible under our present economic system.

  3. nonsense

    Pure, left wing proganda and projection. The give away is all that psycho babale and character assisnation, coming form an academic, no less.

    Why is it that you cannot argue from facts and positions but instead must try to brand your opponents into “kooks”? This is a pointless route of straw men and personal attacks.

    Hayek has been proved right over and over again. The Left has been proved wrong over and ovr again

    1. j.grmwd

      What specifically has been proven right in Hayek? The major thesis in his most well-known work is that the mixed socialist/capitalist economic model of Western Europe post-WWII would lead to totalitarianism. Two generations later where are the dictatorships in Denmark, Germany, the UK etc. ?

      1. jrs

        I thought his major thesis was about calculation and why command economies would fail. But maybe I need to read more Hayek or something, as I’m not speaking from a first hand reading.

    2. Ms G

      @nonsense: Your post reads like a boiler plate bot spam where the only blank that needs to be filled in (as needed) is the name of the particular shill/fraud being defended (in this case “Hayek”).

      Therefore I think you are a troll.

      Note to NC Readers: “DON’T FEED THE TROLLS”!

    3. Paul Tioxon

      51 banks failed and taken over by the FDIC in 2012. From 2009-2011: 389. Thousands of banks have disappeared due to forced mergers, hundreds still remain on the troubled bank watch list, waiting to be merged or taken over by the government as failures. From over 25,000 banks in the USA to little more than 7,000 with over 60% of all banking in the hands of a cartel of 4, monopoly formed by a deregulated market. Hayek empirically debunked. Hayek, dismissed once and for all. Onto the social reconstruction and comprehension political reform.

      1. jake chase

        It wasn’t really deregulated. The government enabled and backstopped and bailed out financial criminals. This isn’t what Hayek argued for in The Road to Serfdom. The major banks should have been allowed to fail, the executives should have been incarcerated, the bonuses should have been recaptured even if it meant bankrupcty for the execs, and small depositors should have been protected, not bondholders. This might have worked better. In fact, knowing the government wasn’t going to rescue them might have made the bankers act more responsibly. We’ll never know.

        1. skippy

          The Government enabled trope – jake

          Cough… The bought and payed for Government.

          Seriously… how is it that you and others – always bastardized – this simple and observable fact.

          Skippy… a degree in economics and 50 years of reading? FFS!

          1. Phraser X

            Paid (payed) for government can’t then in turn “enable” … at this point in Capitalism | US Government you going to solve the Chicken | Egg ?

          2. skippy

            @Phraser X

            Cute but, the evidence is clear ie citizens united, full bore deregulation – self regulation, the history of american corporations and their acts abroad, Major General Smedley Butler USMC, corporations became national security issues, anti trust law become unenforceable, hell most law concerning any compliance for that matter.

            Lets make it simple… if some one pays you… they own you for what they payed for… does the government pay CEOs or the wealthy to toil… or does the private sector pay politicians to toil. There is no chicken or egg, just a contract payed for in full with a bonus clause after public services are rendered to the payee, see: personal wealth of the last few decades of high ranking politicians – explode – upon retirement.

            Skippy… What part of the attempted coup against FDR did you not learn in history class.

            PS… thank you for your evidence free comment, come again some time.

  4. Ms G

    Hayek came to the US (from Austria) via an invitation by the Koch brothers. He refused to accept the invitation because he was afraid he couldn’t find affordable private health insurance. Then Kock told him the US had this thing called Medicare which would cover all of Hayek’s medical bills pretty much for free. And voila, Hayek came to the US and immediately signed up with Medicare!

    Mark Ames, The Nation: the Koch brothers

    Bottom Line: “Neo-Liberal” = “Hyper Hypocrite.” Enough said.

  5. The Dork of Cork.

    France is beginning to find its inner Vabaun again – but its probably too late for that now.

    Could never understand why people cannot conceptualize planning & chaos working together.
    Why does it have to be all chaos & chaos
    or all planning & planning ?
    The world does not work like a clock , on the other hand somebody need to keep the time.

    “Its my life……………it never ends……….”

    1. Sufferin' Succotash

      Ah yes, Sebastien de Vauban, who certainly deserves a niche in the pantheon of Enlightenment Precursors. His proposal for fiscal reform–which was not just banned but publicly burned on the orders of Louis XIV–was one of the most intelligent notions about taxation ever written. Too intelligent, in fact, for most political elites over the past three centuries.

      1. The Dork of Cork.

        I slept inside these walls once and had some of the worst nightmares of my life…….énées-Orientales)

        The history of Europe is really all about a conflict between nation state systems of control with mainly inner hinterlands and trading market state systems of control with oceanic trading hinterlands.
        But they are both systems of control – so pick your poison.

        But it is so mixed up now because of the role of fluid Petro post 1914 that nothing fits very neatly into little boxes.

        I however have no doubt we need to break up the euro market state – its a absurd but dark creation which has burned through global capital at a simply enormous rate in a manic effort to avoid labour and extract its value.

        Its a bone marrow sucker of the worst kind.

    2. digi_owl

      tolerance and cooperation do boring headlines make. Big media needs conflict and partisanship so that they can present big scaremongering headlines…

    1. diptherio

      My ninth grade American History teacher actually pronounced it like that: “lazy fair.” She honestly thought that was correct. Bugged the shit out of me even then…

      1. The Dork of Cork.

        The treasury & CB as one symbiotic unit. (a concept I dislike but none the less this is true of the modern world)

        Those notes were used to bail out the BoE as there was a run on it during 1914.
        It was effectively the end to that post Napoleonic period of globalization.

        In the end the state is the only entity which can produce money , the CB produces credit.

        In the below Irish video they talk about the Euro central bank printing money and are thankful that their world has remained together and again seek to build a larger ponzi via centralization of former European sov states.

        They need a fiat / tax dictatorship before they can truly conquer European states without those messy nation state complications.

        We are held within the grasp of a very nasty Euro Soviet which wants to further increase Efficiency (always at the expense of redundancy).
        They whoever they are want to push more resources upwards……but you cannot win a war by giving Generals unlimited rifles , they don’t know what to do with them.

        In extremis the nation states had to push resources downwards to the Baldrics of this world.
        However when they took the bullet for their beliefs Physical resources went upward again.

          1. The Dork of Cork.

            All modern economics (dealing with high fossil fueled energy Industrial systems) comes back to this.


            In their efforts to avoid labour inputs the capitalists have created a global barbell economy of absurd size and lack of redundancy…..
            The western weight has been puffed out by a Nat gas bubble (now collapsing in Europe) while China is the biggest coal consumer squared that ever was.
            All linked by marine bunker fuel….

            One tiny break in this super efficient system such as Japan now eating all the former Euro LNG pies and it comes unglued.

            This is very much a 1914 moment.

        1. Aquifer

          Dork –

          ” …. wants to further increase Efficiency (always at the expense of redundancy).

          Reminds me of a critique/observation that periodically comes to mind – If corps had designed people we would have, at most, i lung, i kidney, 1/2 a liver, etc. etc – all that other stuff is sooo redundant and burns a bunch of energy for no obvious purpose – except, perhaps, for the survival of the organism when the shit hits the fan, or various pieces/parts wear down ….

          In terms of human “economic theory”, we are verrry “inefficient” creatures indeed ….

  6. The Dork of Cork.

    What do you think of this debate.

    You have (I want to puke ) Birgit Laffin – the euro will be there in 10 years……..

    A Reuters (Rothschild ) functionary who thinks we will have another 10 years of deflation in the PIigs

    “The period of acute crisis is over………”

    “He wants to retool these economies”
    To make them more efficient”

    But they were very efficient already…………that was their problem.
    The idea of money for local commerce seems to be lost on him.
    The function of economies in his eyes is to export stuff.

    I want to cry now.

    No one asks what the function of the euro & the EU is ?
    The function seems to be integration without a purpose (other then extraction of course)

    1. Generalfeldmarschall Von Hindenburg

      The purpose of the EU and the euro (& NATO ) was always first and foremost to keep Germany firmly tied to the service of US power.

  7. The Dork of Cork.

    This technocratic distant machine is ironically very much a Hayekian wet dream.

    The cities monetarist merchant bank reflexes is now Irelands only defence against the Euro monster.

    Its quite ironic & sad.

  8. sleepy

    Although we all live with the results of neoliberalism in the immediate present, thanks for laying out a succint, historical account of its “intellectual” precedents.

  9. Ted

    The one thing that I really liked about this article is the distinction between neoliberalism and classical liberalism. Unfortunately, from what I can tell, most people don’t understand the difference. Neoliberalism is the “far-right, right-wingers, conservatives, neoconservatives, etc.” They left classical liberalism, or true libertarians, after the New Deal/WWII created the modern version of big government and decided to use big government for their purposes.

    In other words, they are just the other side of the coin from modern liberals (or lefties as referred to today) of promoting big government. Both the modern left and right love government but have different visions of what government should do.

    Classical liberals, or true libertarians, are vehemently opposed to government–borderline anarchists. Practically speaking, they align with liberals and conservatives depending on the issue (socially liberal, fiscally conservative).

    The frustarting part is that popluar media, and the blogosphere, often put libertarians and conservatives in the same category. Let me emphatically state–THEY ARE NOT!

    Libertarianism is based on the principle of non-aggression. An individual has the right to chose to do whatever they want as long as it doesn’t interfer with the right to chose of others. Any interaction between people/institutions is done on a purely voluntary basis.

    This is the opposite of liberals/conservatives who want to restrict the rights of others by reducing their choice of actions through the implicit and explicit use of government force. The government is the only institution that is legally allowed to use violence. Government at the lowest common denominator is about someone saying, “Here is my gun and here is my badge–so either do this or that (or don’t do this or that depending on the circumstances) or else!”

    Since the end is determined by the means, and the means of government is ultimately violence, everything that government touches eventually turns to sh!@. Ultimately, lasting peace and prosperity are only achievable through voluntary actions, i.e. libertarian principles. It is ironic that liberals, who often think of themselves as kind and compassionate, actually promote the most violent entity mankind has ever invented.

    Having said all of that, I assume that most readers of this blog are liberals so let’s at least work together in areas we can agree on. In the US, the 2012 election served a harsh blow to social conservatives so let’s keep this up and reduce government in the private/social areas of people’s lives.

    1. Philip Pilkington

      That is absolutely NOT the message of this article. The message is this: libertarisnism is a bogus ideology concocted by some very unusual people. It was also a massively impractical doctrine and its founders knew it. So, they allied themselves with more moderate people — who came to be known as neoliberals — in order to get their policies in place in watered down form.

      Neoliberalism grew, quite organically, out of libertarian ideology. The latter is not a real political stance. It’s just a cop out and a fantasy. One that allows people to broadly support neoliberalism in the hope that they’re furthering the agenda of “the market”. The libertarians may THINK that they’re seperate from the neoliberals, but they’re not. They’re one and the same.

      1. Watt4Bob


        A very useful point to help when we talk with self-described libertarians is their definition;

        “Libertarianism is based on the principle of non-aggression. An individual has the right to chose to do whatever they want as long as it doesn’t interfer with the right to chose of others.”

        The problem being that in the real world, it is very hard to see all the ramifications of our actions, OTOH, it’s very easy to do immense damage to others, sometimes far removed from our selves by selfish behaviour.

        And yes, there’s a lot of willful blindness on the part of selfish people, who do everything they can to ignore the damage they do in the excercise of their ‘freedom’.

        1. Ted

          Consequences are a key aspect of liberty–one must be held responsible for their actions. If you are harmed by someone then that is a role for courts (whether criminal or civil). Moreover, the focus should be on restitution and not just punishment.

        2. LucyLulu

          “A very useful point to help when we talk with self-described libertarians is their definition”

          And therein lies the problem with libertarianism. Self-described libertarians use different definitions. I’ve run across ‘libertarians’ who were fiscally liberal. I’m not sure any classic definition specifies a fiscal position. I would agree that a primary trait is the belief that people should be allowed to do whatever doesn’t hurt others, yet there are libertarians who are socially conservative and don’t subscribe to this either. Libertarians seem to run the gamut though most associate people like the Koch brothers with libertarianism, whose beliefs turn “compassionate conservatism” into a contradiction of terms, as they have no empathy for those who are less fortunate or otherwise unable to provide for themselves………. unless it happens to be them.

        3. Min

          “Libertarianism is based on the principle of non-aggression.”

          Funny. It doesn’t seem to me at all like the Jain religion.

      2. Max424

        A citizen –of possible– unsound mind said to me the other night, “You won’t believe this but, mindless alien lizard people are trying to take over this planet.”

        I said, “No. I believe it. They’re called libertarians.”

        1. diptherio

          Come on Max, Ted is making an honest effort to engage in political dialogue. Ad hominem attacks, imho, should be saved for those who truly deserve it.

          Assuming that Ted, like most libertarians I have met, is genuinely concerned with liberty and non-aggression, why not try to engage in a dialogue to figure out how it is that you and him have come to such differing opinions about what those words mean or imply? Because it’s harder and more time consuming than just calling them names, I guess, but it really isn’t adding anything positive to our political discourse, just creating more resentment and encouraging the de-humanization of our fellow humans with whom we happen to disagree (on some things).

          1. Max424

            Ted was spewing bile and nonsense.

            Ted says: “…liberals/conservatives … want to restrict the rights of others…”

            Ted of the subtle forward slash is comparing me, a New Deal liberal, with Ronald Reagan and Grover Norquist?

            Ted says: “…the means of government is ultimately violence, everything that government touches eventually turns to sh!t.”

            If this true, the only alternative is to eliminate government entirely (maybe drown Gov in a bathtub with the help of the neo-liberals and the neo-cons?).

            Yet Ted, if I’m deciphering this cryptic sentence right, is opposed to anarchism: “Classical liberals, or true libertarians, are vehemently opposed to government–borderline anarchists…”

            So what does Ted want. No government and … no anarchism?

            I’d like to see it, for sh*ts and giggles, but I guarantee, not implementing the …whatever?… will prove difficult.

            Note: Would I ally with BigGov to impose sanctions on businesses that tried to ban people based on the color of their skin? Yes I would. Call me a New Deal totalitarian for despising separate but equal. Or better yet, call me a fallen disciple of the Paul’s, Rand and Ron, because I have strayed from “true liberal principles.” That would make me happy.

            But let’s see. Ted, I assume, wants to legalize marijuana. Ted for reasons of liberty! And freedom!

            Me too, in part, come to think of it. Cool, we agree on something.

          2. LucyLulu

            I believe Ted was saying that libertarians ARE borderline anarchists (due to their opposition to government).

            Hands-off government might work okay if all people were honest, ethical, and kind. But we don’t live in that kind of world. We need some type of entity to enforce social mores, prevent both criminal and unethical sorts from trampling the rights of others, impose and enforce the rules that govern our society. That entity happens to be government. We’ve seen what has happened, and is happening, with the banking system allowed to operate in a lazy-faire environment. Given a contest between an honest business and a business that cheats, the cheating business has the advantage and invariably wins.

            Ted says he believes in consequences, and it is the courts (government) who should mete out the consequences. This also implies the existence of functioning regulators to uncover wrongdoing, and a system of rules/guidelines. Suddenly, the government is no longer so small, and is seen as restricting liberty when the rules don’t suit those being ruled.

          3. Max424

            “I believe Ted was saying that libertarians ARE borderline anarchists …”

            You’re right LucyLulu. The hyphen confused me. Ted is opposed to government, which makes Ted, a borderline anarchist.

            Hmm…a borderline anarchist.

            I am a borderline anarchist. What I want is just the right amount of anarchy. This means we, or more non-specifically, I and some other I’s, not working together, will need to get lucky and randomly administer perfect doses of some of that anti-anarchist government that barely exists, to prevent total anarchy, while allowing for lot’s and lot’s of anarchy.

            Have you ever heard anything so stupid?

            Look, I am New Deal liberal, and I think government is WAY TOO BIG. So, I would chop big bad government down by two-thirds. Good-bye military industrial complex and rule by government-tit sucking corporations. Good-bye Fed and a monetary policy that DWARFS fiscal policy. Good-bye rule by Big Finance.

            No more Patriot Act. No more Presidential assassinations of Americans, or anybody else. Good-bye huge, omnipresent government.

            Would I get rid of the Post Office? F*ck no. I’d double it. The Postal Service performs a great public good. And it costs a pittance.

      3. Ted

        “The latter [libertarianism]is not a real political stance. It’s just a cop out and a fantasy.”

        Since when is individual liberty not a real political stance? The alternative is collectivism in some form. I’ll take liberty any day.

        Just because you may not agree with my personal choices does not give you (or the politicians) the right to stick a gun in my face. Individuals allowed to live in peace and harmony always result in best society. It was how the Western hemisphere left the Dark Ages in the dust during the Enlightenment period. Please don’t take us back.

        1. Robert Dudek

          Ted (the libertarian)…

          Your problem is you think there is such a thing as pure liberty – there isn’t. Everything we do as individuals in some way relates to society – i.e. has an impact on others.

          That is why libertarianism is a complete sham – it in no way describes how a real or possible human society operates.

          Please reflect on this before you continue to embarrass yourself.

        2. RanDomino

          Libertarian Capitalists want to have no government and somehow keep title-based property. Can’t have it both ways. Minimalist ‘Constitutionalists’ think the government’s role is to protect title and nothing else, but fail to realize (or intentionally ignore) that the entire modern legal code could be rebuilt from that principle, because protecting against externalities would certainly fall under that. Those who believe in no government at all, leaving it up to arbitrators and insurance corporations (never mind that courts and insurance are some of the most alienating and miserable aspects of modern society), simply declare that corruption and manipulation would not occur.

          Meanwhile, those who believe that it’s feasable for the government to be a neutral regulator of the economy should be fairly well disproved by now, leaving as the only logical conclusion the impossibility of capitalism in any form.

      4. Beppo

        Most libertarians do not seem to realize they have invested themselves in a constructed plutocrat ideology. They honestly think they are smart guy anarchists.

    2. diptherio

      It may well be the case that it is not possible to move from the kleptocratic politico-economic system we currently suffer under to a more just, democratic one through reform of existing institutions. Any regular reader here should be able to come up with their own host of reasons for that.

      If this is indeed the case, if the best that we can hope for from reform efforts are additional band-aids that will only serve to lessen the bleeding while leaving the underlying wounds to fester; allowing the zombie edifice to totter onwards, leaving ever more human and ecological catastrophe in its wake, then the anarchists and libertarians may have a point.

      OTOH, it seems callous in the extreme to argue that, for instance, food stamp programs should be reduced, since everything government touches turns to sh*t (not that Ted has made that argument). “The government” is, in fact, not a monolithic edifice, but rather a multifaceted and complex, even paradoxical one. If our highest value is the quality of human lives, we must admit that our government has both positive and deleterious effects.

      So if we can’t reform it, and if destroying it might cause untold suffering by those already at the bottom of the pyramid, what can we do?

      I propose re-structuring. Rather than spend all our time tilting at the windmills of Federal and corporate power, I would have us spend some of our time creating alternative, non-coercive (i.e. cooperative) institutions that can fill some of the needs that currently only the Feds can offer. Much outside-the-box thinking is required.

      Cooperative businesses are one tactic that I never tire of promoting. The cooperative structure alters a fundamental initial condition of our economic system: who gets to decide how where the revenue goes. Altering initial conditions is one sure way of creating cascading change throughout a complex system.

      There is good reason to think that a cooperative business would be able to out-compete similar capitalist enterprises, since the necessity of providing a profit margin above and beyond operating costs does not exist for the co-op. And imagine how different our world might look if our all businesses made their decisions through majority vote of all employees, rather than through the self-serving machinations of executives and boards of directors.

      In conclusion: can’t we all just get along?

      Ted, thanks for your comment.

    3. jonboinAR

      The means of all of us is ultimately violence. I don’t know what is the argument that delegitimizes government, but that isn’t it, IMO.

  10. don

    Is one to believe that the origins of neoliberalism are due not to specific social and economic developments but to the thinking of one individual?


  11. The Dork of Cork.

    The final line of the Reuters functionary is quite funny.

    He states grown up countries pay their debts………….
    If you want to be taken seriously like.

    Its such a tortured twisted road.

    So many actors with different types of skin in this sordid game of running down the capital base to express short term profits just one last time baby.

  12. jsmith

    Besides the economic nonsense that neoliberalism promotes if people would like to read more about the political and moral implications that were spawned by said thought system I suggest reading Bruno Amable’s article in the Oxford Journal which I have posted here a few times “Morals and politics in the ideology of neo-liberalism” but which now – surprise, surprise – is locked behind a paywall.

    Did a cursory search but didn’t find a working – free – link to it.

    The article adds to PP’s expose by highlighting the philosophical/political outgrowths and implications of said neoliberal nonsense and how a tightly-woven loop of elite justification was created once the “economic” foundations were laid down.

    While faulted – sometimes justifiably – for intellectual righteousness, socialists and the left never was as successful tapping into the enlarged amygdala crowd of the right that needed a MORAL righteousness to accompany even the merest whispers of philosophical justification.

    Neoliberalism graduated from a pseudo-intellectual lark into THE vehicle by which the suppressed aspirations of closeted fascists all over the world could openly adhere to without feeling guilty.

    No longer were they greedy fascist scum, they were natural tools and products of a system that had justifiably rewarded them while condoning their actions and providing a means by which their consciences – hah! – would remain clean.

    Partly because the economic thought that it began with is so inherently worthless, the political/philosophical aspects of neoliberalism were free to be morphed/woven into any number of already existing socio-political thought systems.

    Evangelical Christianity? Yup

    Technocratic Euorpean “socialism” and “communism”? Yup

    Social Darwinism? Yup

    Radical Islam – see this article on the IMF & Mursi and the MB? Yup

    Because neoliberalism is knowingly such horsesh!t through and through, in the hands of sophisticated and well-paid propagandists it can be tuned to fit what ever thought system – or society – it needs to virally invade.

    Sure, the elite leaders of said countries are already on board but due to the inherent bankruptcy of neoliberalism a “Third Way” to meet a specific country/society’s “needs” can always be crafted so as to keep the populace in line with “reasonable” sounding ideas and slogans.

    Althought the trolls who’ve already popped up here are pretty good exemplars of how successful neoliberalism has been at invading the minds of the US populace, if anyone needed any further proof drop by ZeroHedge and jump into the comment threads if you dare.

    I’ve got to run but here’s a great example I saw just the other day: an article on Yahoo about the Spanish protesting the privatization of their health care .

    Take a good look at the comments and you realize that while it is good to examine the nothingness of neoliberal economics, it is the the politico-philosohpical aspects of it – Strauss, etc – that have really damaged the psyche of otherwise intelligent human beings through a relentless stream of propaganda.

        1. JimX

          Actually, I should have signed my thanks with JimX, I’m not the Jim on the other posts in this thread.

    1. Aquifer

      ” ….socialists and the left never was as successful tapping into the enlarged amygdala crowd of the right that needed a MORAL righteousness to accompany even the merest whispers of philosophical justification.”

      Well, considering that we ALL have amygdala, perhaps it is time for “the left” to learn how to tap into it … :)

    2. ShMagus

      The technical details of how this tuning has been done is documented in Naomi Klein’s The Shock Doctrine.

  13. Schofield

    In his book “The Neo-liberal State” the social-democrat Raymond Plant argues that Hayek was not an extreme Libertarian but conceded that the state had a role to play in providing basic welfare provision. Plant argues that once this is conceded it becomes extremely hard for Libertarians to determine formulas that define what “basic” should be since “standards of living” are an evolving target.

  14. Jim

    Philip, could it also be that Hayek’s world view was not caused by delusion or repression but was simply a different moral choice—one quite different from the moral choices you have made (or I have made) about the nature of economics, politics and society.

    Have you ever considered the possibility that your own deep emotional attachment to your own ideological perspective is contributing to a compulsion on your part to view his quite different moral choices as a delusion?

    As Robert Skidelsky pointed out in “John Maynard Keynes: The Economist as Savior:1920-1937 pp. 457-459 “Hayek did not believe that government could improve on Nature’s remedy. He was wholly opposed to the method of overcoming depression by a policy of cheap money (inflation) which would only perpetuate the maladjusted structure of production. There was nothing a government could do to get an economy out of a depression before its natural end had come. Hayek, like Keynes, hoped to prevent a slump from developing by preventing the credit cycle from starting. But his method was very different. It was to forbid the banks to create credit, something which could best be achieved by adherence to a full gold standard. He was quite pessimistic though, about this being a practical politics, so his conclusion, like Keynes, was that a credit-money capitalist system is violently unstable—only with the difference being that nothing could be done about it.”

    Skidelsky adds “that Keynes befriended Hayek during the war and it was he who proposed him for a fellowship of the British Academy in 1944.”

    Such a spirit of generosity seems quite rare among economic/political opponents in 2013—although such absence of generosity certainly helps to maintain the status quo structure of power.

    1. Philip Pilkington

      “Philip, could it also be that Hayek’s world view was not caused by delusion or repression but was simply a different moral choice…”

      Okay, let’s actually consider this. Hayek pretty much fabricated history in saying that totalitarianism grew out of state intervention. He then projected a massive delusion onto the political scene claiming that economies with state intervention would result in totalitarianism. Now, he had NO evidence for this. And, unsurprisingly, it didn’t happen in all the economies with state planning — or even in those Scandinavian countries that remain social democratic.

      So, is this a “moral choice”, as you put it? No more than believing in UFOs is a moral choice. Or believing in wild conspiracies is a moral choice. There’s a difference between moral choice and repression of reality and self-delusion. If you don’t understand the difference… well… I guess you’d call that your “moral choice”.

    2. JTFaraday

      But the real litmus test is whether he would really have let the creative destruction of “the market” push C, JPM, and GS off the face of the planet in 2008–instead of pushing them ever deeper into the bowels of an already corrupt global hegemon, which is what we got from the interventionists.

      Meanwhile whether this unholy fusion of church and state becomes a full fledged totalitarianism or not remains to be seen.

      Anyone taking bets?

  15. Schofield

    Raymond Plant’s book “The Neo-liberal State” is informed throughout by Alan Gewirth’s “Principle of Generic Consistency” found in Gewirth’s book “Reason and Morality” where he argues it is irrational for Libertarians to pretend that human societies can depend solely on “negative rights” and not a combination of these and “positive rights” which brings you right back to the moral issue of what should constitute “basic” welfare provision.

  16. Schofield

    Jim says:-

    “Hayek did not believe that government could improve on Nature’s remedy. He was wholly opposed to the method of overcoming depression by a policy of cheap money (inflation) which would only perpetuate the maladjusted structure of production.”

    This was simply because Hayek didn’t understand that a sovereign currency government acted like a special type of bank (MMT style) able to create money, or rather credit, without pre-funding and inject it into an economy either directly (or indirectly through tax deductions) or through government spending programmes. Hayek merely saw there was one type of credit creating bank, the private bank. He failed to understand that both the government bank and private banks work together to create the National Credit and especially in times of recession usually caused by private banks immoral tendency to seek value outside of normal market discovery processes.

  17. Jay Goldfarb

    If von Hayek didn’t sound like such a humorless person I could almost think he was winking at us with the title The Road To Serfdom.

  18. Schofield

    Jay Goldfarb says:-

    “If von Hayek didn’t sound like such a humorless person I could almost think he was winking at us with the title The Road To Serfdom.”

    I think he was a humorless individual and a somewhat confused Libertarian and would be even more confused by the high level of debt bondage taking place under Neo-Liberalism in our societies were he alive today. His only worthwhile arguments were concerning the use of knowledge in an economy and how this helps the discovery of value in the marketplace:-

    1. Neo:s

      “were Freidman alive today” . Why are you saying it in a past sense when there are millions upon millions here on planet earth where some actually believe the messiah Freidman within the cult-religion “Neo-liberalism” will return any given day. And where some believe that he is actually alive and spiritually guiding all the religions supporters world-wide.

  19. Jim


    What if it is the case that all of us tend to fabricate history to some degree in order to give our moral choices an air of objectivity?

    What if every process of conceptualization (for whatever ideological perspective) involves a prior choice as to where to cut one’s respective conceptual focus–that does not exist independently of our formulation?

    What if the origins of totalitarianism can be found not in Hayek’s “spontaneous market order” but in the desire for certainty–to touch a reality which may be untouchable?

    1. Philip Pilkington

      Right. Here comes the metaphysical battering ram. Sure, you can spend your time naval-gazing and reflecting on that relativistic garbage if you want. You may even fool yourself into thinking that it disproves the world around you. But I’ll level with you, brother: what you’re really doing is making sophistical arguments that negate reality so that you can invent your own little fantasies which you can project onto the world. Wipe the slate clean using juvenile philosophical cliches, then write onto it a fairytale of your choosing.

      Hey, that’s your choice. It’s not what I’d call a moral choice, but you can call it that if you want — just like you can call a cat a dog, if that suits your fancy. One thing though: it’s actually generally people who subscribe to this “constructivist” view of the world that cause tyrannies. That’s not an “interpretation” either. That’s a fact.

  20. Aquifer

    “Many are perplexed with how right-wingers and vulgar libertarians completely change the meaning of the English language and denounce centrist and centre-left politicians and commentators as “socialist” when these people have no interest in having the state seize control over the means of production – which is the definition of the term “socialism”.”

    Is this the official definition of “socialism”?

    i ask because it seems to me that a good part of the problem in trying to reconcile any views pro/con re “socialism”, or “liberalism,” or any other “ism”, for that matter, is the fact, it appears, that we can’t even agree on a definition …. Coming from a tradition of formal debate – this rather drives me bonkers …

    Is there some NC dictionary we could all use as a reference so we could all be in the same page to start, at least? Or is that, itself, some sort of “ism” request that reflects my bias re something or other …

    1. Philip Pilkington

      [soh-shuh-liz-uh m] Show IPA
      a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.
      procedure or practice in accordance with this theory.

      1. Valissa

        A more thorough overview here… and the key point, is that there is no single definition… hence the length and breadth of this article…Socialism
        Socialism is an economic system characterised by social ownership of the means of production and co-operative management of the economy, and a political philosophy advocating such a system. “Social ownership” may refer to cooperative enterprises, common ownership, state ownership, or citizen ownership of equity. There are many varieties of socialism and there is no single definition encapsulating all of them. They differ in the type of social ownership they advocate, the degree to which they rely on markets or planning, how management is to be organised within productive institutions, and the role of the state in constructing socialism.

        Given the ambiguity and multiple meanings of the word ‘socialism’ I think each person who brings it up for discussion is responsible for defining what they mean by it. Easy answers and definition are convenient, but often not all that accurate.

        1. Philip Pilkington

          So, Wikipedia is an authority on the meaning of the term ranked higher than the English dictionary?

          The internet really is killing language. Very depressing. Arthur Blair must be turning in his grave.

          1. Valissa

            I think you missed my point about simplicity versus complexity. Online dictionaries are meant to supply the simpler definitions not more thorough discussions, so it’s not a matter of competing authority. Although, perhaps in another way, it is ;)

  21. Jim

    Philip argued “One thing though: its actually generally people who subscribe to the “constructivist” view of the world that causes tyrannies.”

    On this sentiment you appear to be in total agreement with Hayek who was firmly opposed to what he called “constructivism” which he says is the result of “synoptic illusion.”

    With the archetype of constructivism, for Hayek, being socialism!

    1. Philip Pilkington

      Haha! Like a lunatic in a straight-jacket denouncing the world around him for its insanity. Poor Hayek. At some point you just got to feel sorry for the guy. But I guess some people live their whole lives trapped in a giant lie. Terrible pity.

  22. skippy

    A Short History of Neo-liberalism

    Twenty Years of Elite Economics and Emerging Opportunities for Structural Change
    by Susan George
    Conference on Economic Sovereignty in a Globalising World
    Bangkok, 24-26 March 1999

    The Conference organisers have asked me for a brief history of neo-liberalism which they title “Twenty Years of Elite Economics”. I’m sorry to tell you that in order to make any sense, I have to start even further back, some 50 years ago, just after the end of World War II.

    In 1945 or 1950, if you had seriously proposed any of the ideas and policies in today’s standard neo-liberal toolkit, you would have been laughed off the stage at or sent off to the insane asylum. At least in the Western countries, at that time, everyone was a Keynesian, a social democrat or a social-Christian democrat or some shade of Marxist. The idea that the market should be allowed to make major social and political decisions; the idea that the State should voluntarily reduce its role in the economy, or that corporations should be given total freedom, that trade unions should be curbed and citizens given much less rather than more social protection–such ideas were utterly foreign to the spirit of the time. Even if someone actually agreed with these ideas, he or she would have hesitated to take such a position in public and would have had a hard time finding an audience.

    However incredible it may sound today, particularly to the younger members of the audience, the IMF and the World Bank were seen as progressive institutions. They were sometimes called Keynes’s twins because they were the brain-children of Keynes and Harry Dexter White, one of Franklin Roosevelt’s closest advisors. When these institutions were created at Bretton Woods in 1944, their mandate was to help prevent future conflicts by lending for reconstruction and development and by smoothing out temporary balance of payments problems. They had no control over individual government’s economic decisions nor did their mandate include a licence to intervene in national policy.

    In the Western nations, the Welfare State and the New Deal had got underway in the 1930s but their spread had been interrupted by the war. The first order of business in the post-war world was to put them back in place. The other major item on the agenda was to get world trade moving–this was accomplished through the Marshall Plan which established Europe once again as the major trading partner for the US, the most powerful economy in the world. And it was at this time that the strong winds of decolonisation also began to blow, whether freedom was obtained by grant as in India or through armed struggle as in Kenya, Vietnam and other nations.

    On the whole, the world had signed on for an extremely progressive agenda. The great scholar Karl Polanyi published his masterwork, The Great Transformation in 1944, a fierce critique of 19th century industrial, market-based society. Over 50 years ago Polanyi made this amazingly prophetic and modern statement: “To allow the market mechanism to be sole director of the fate of human beings and their natural environment…would result in the demolition of society” [p.73]. However, Polanyi was convinced that such a demolition could no longer happen in the post-war world because, as he said [p.251], “Within the nations we are witnessing a development under which the economic system ceases to lay down the law to society and the primacy of society over that system is secured”.

    Alas, Polanyi’s optimism was misplaced–the whole point of neo-liberalism is that the market mechanism should be allowed to direct the fate of human beings. The economy should dictate its rules to society, not the other way around. And just as Polanyi foresaw, this doctrine is leading us directly towards the “demolition of society”.

    So what happened? Why have we reached this point half a century after the end of the Second World War? Or, as the organisers ask, “Why are we having this conference right now?” The short answer is “Because of the series of recent financial crises, especially in Asia”. But this begs the question–the question they are really asking is “How did neo-liberalism ever emerge from its ultra-minoritarian ghetto to become the dominant doctrine in the world today?” Why can the IMF and the Bank intervene at will and force countries to participate in the world economy on basically unfavourable terms. Why is the Welfare State under threat in all the countries where it was established? Why is the environment on the edge of collapse and why are there so many poor people in both the rich and the poor countries at a time when there has never existed such great wealth? Those are the questions that need to be answered from an historical perspective.

    As I’ve argued in detail in the US quarterly journal Dissent, one explanation for this triumph of neo-liberalism and the economic, political, social and ecological disasters that go with it is that neo-liberals have bought and paid for their own vicious and regressive “Great Transformation”. They have understood, as progressives have not, that ideas have consequences. Starting from a tiny embryo at the University of Chicago with the philosopher-economist Friedrich von Hayek and his students like Milton Friedman at its nucleus, the neo-liberals and their funders have created a huge international network of foundations, institutes, research centers, publications, scholars, writers and public relations hacks to develop, package and push their ideas and doctrine relentlessly.

    They have built this highly efficient ideological cadre because they understand what the Italian Marxist thinker Antonio Gramsci was talking about when he developed the concept of cultural hegemony. If you can occupy peoples’ heads, their hearts and their hands will follow. I do not have time to give you details here, but believe me, the ideological and promotional work of the right has been absolutely brilliant. They have spent hundreds of millions of dollars, but the result has been worth every penny to them because they have made neo-liberalism seem as if it were the natural and normal condition of humankind. No matter how many disasters of all kinds the neo-liberal system has visibly created, no matter what financial crises it may engender, no matter how many losers and outcasts it may create, it is still made to seem inevitable, like an act of God, the only possible economic and social order available to us.

    Let me stress how important it is to understand that this vast neo-liberal experiment we are all being forced to live under has been created by people with a purpose. Once you grasp this, once you understand that neo-liberalism is not a force like gravity but a totally artificial construct, you can also understand that what some people have created, other people can change. But they cannot change it without recognising the importance of ideas. I’m all for grassroots projects, but I also warn that these will collapse if the overall ideological climate is hostile to their goals.

    So, from a small, unpopular sect with virtually no influence, neo-liberalism has become the major world religion with its dogmatic doctrine, its priesthood, its law-giving institutions and perhaps most important of all, its hell for heathen and sinners who dare to contest the revealed truth. Oskar Lafontaine, the ex-German Finance Minister who the Financial Times called an “unreconstructed Keynesian” has just been consigned to that hell because he dared to propose higher taxes on corporations and tax cuts for ordinary and less well-off families.

    Having set the ideological stage and the context, now let me fast-forward so that we are back in the twenty year time frame. That means 1979, the year Margaret Thatcher came to power and undertook the neo-liberal revolution in Britain. The Iron Lady was herself a disciple of Friedrich von Hayek, she was a social Darwinist and had no qualms about expressing her convictions. She was well known for justifying her programme with the single word TINA, short for There Is No Alternative. The central value of Thatcher’s doctrine and of neo-liberalism itself is the notion of competition–competition between nations, regions, firms and of course between individuals. Competition is central because it separates the sheep from the goats, the men from the boys, the fit from the unfit. It is supposed to allocate all resources, whether physical, natural, human or financial with the greatest possible efficiency.

    In sharp contrast, the great Chinese philosopher Lao Tzu ended his Tao-te Ching with these words: “Above all, do not compete”. The only actors in the neo-liberal world who seem to have taken his advice are the largest actors of all, the Transnational Corporations. The principle of competition scarcely applies to them; they prefer to practise what we could call Alliance Capitalism. It is no accident that, depending on the year, two-thirds to three-quarters of all the money labeled “Foreign Direct Investment” is not devoted to new, job-creating investment but to Mergers and Acquisitions which almost invariably result in job losses.

    Because competition is always a virtue, its results cannot be bad. For the neo-liberal, the market is so wise and so good that like God, the Invisible Hand can bring good out of apparent evil. Thus Thatcher once said in a speech, “It is our job to glory in inequality and see that talents and abilities are given vent and expression for the benefit of us all.” In other words, don’t worry about those who might be left behind in the competitive struggle. People are unequal by nature, but this is good because the contributions of the well-born, the best-educated, the toughest, will eventually benefit everyone. Nothing in particular is owed to the weak, the poorly educated, what happens to them is their own fault, never the fault of society. If the competitive system is “given vent” as Margaret says, society will be the better for it. Unfortunately, the history of the past twenty years teaches us that exactly the opposite is the case.

    In pre-Thatcher Britain, about one person in ten was classed as living below the poverty line, not a brilliant result but honourable as nations go and a lot better than in the pre-War period. Now one person in four, and one child in three is officially poor. This is the meaning of survival of the fittest: people who cannot heat their houses in winter, who must put a coin in the meter before they can have electricity or water, who do not own a warm waterproof coat, etc. I am taking these examples from the 1996 report of the British Child Poverty Action Group. I will illustrate the result of the Thatcher-Major “tax reforms” with a single example: During the 1980s, 1 percent of taxpayers received 29 percent of all the tax reduction benefits, such that a single person earning half the average salary found his or her taxes had gone up by 7 percent, whereas a single person earning 10 times the average salary got a reduction of 21%.

    Another implication of competition as the central value of neo-liberalism is that the public sector must be brutally downsized because it does not and cannot obey the basic law of competing for profits or for market share. Privatisation is one of the major economic transformations of the past twenty years. The trend began in Britain and has spread throughout the world.

    Let me start by asking why capitalist countries, particularly in Europe, had public services to begin with, and why many still do. In reality, nearly all public services constitute what economists call “natural monopolies”. A natural monopoly exists when the minimum size to guarantee maximum economic efficiency is equal to the actual size of the market. In other words, a company has to be a certain size to realise economies of scale and thus provide the best possible service at the lowest possible cost to the consumer. Public services also require very large investment outlays at the beginning–like railroad tracks or power grids–which does not encourage competition either. That’s why public monopolies were the obvious optimum solution. But neo-liberals define anything public as ipso facto “inefficient”.

    So what happens when a natural monopoly is privatised? Quite normally and naturally, the new capitalist owners tend to impose monopoly prices on the public, while richly remunerating themselves. Classical economists call this outcome “structural market failure” because prices are higher than they ought to be and service to the consumer is not necessarily good. In order to prevent structural market failures, up to the mid-1980s, the capitalist countries of Europe almost universally entrusted the post office, telecomms, electricity, gas, railways, metros, air transport and usually other services like water, rubbish collection, etc. to state-owned monopolies. The USA is the big exception, perhaps because it is too huge geographically to favour natural monopolies.

    In any event, Margaret Thatcher set out to change all that. As an added bonus, she could also use privatisation to break the power of the trade unions. By destroying the public sector where unions were strongest, she was able to weaken them drastically. Thus between 1979 and 1994, the number of jobs in the public sector in Britain was reduced from over 7 million to 5 million, a drop of 29 percent. Virtually all the jobs eliminated were unionised jobs. Since private sector employment was stagnant during those fifteen years, the overall reduction in the number of British jobs came to 1.7 million, a drop of 7% compared to 1979. To neo-liberals, fewer workers is always better than more because workers impinge on shareholder value.

    As for other effects of privatisation, they were predictable and predicted. The managers of the newly privatised enterprises, often exactly the same people as before, doubled or tripled their own salaries. The government used taxpayer money to wipe out debts and recapitalise firms before putting them on the market–for example, the water authority got 5 billion pounds of debt relief plus 1.6 billion pounds called the “green dowry” to make the bride more attractive to prospective buyers. A lot of Public Relations fuss was made about how small stockholders would have a stake in these companies–and in fact 9 million Brits did buy shares–but half of them invested less than a thousand pounds and most of them sold their shares rather quickly, as soon as they could cash in on the instant profits.

    From the results, one can easily see that the whole point of privatisation is neither economic efficiency or improved services to the consumer but simply to transfer wealth from the public purse–which could redistribute it to even out social inequalities–to private hands. In Britain and elsewhere, the overwhelming majority of privatised company shares are now in the hands of financial institutions and very large investors. The employees of British Telecom bought only 1 percent of the shares, those of British Aerospace 1.3 percent, etc. Prior to Ms Thatcher’s onslaught, a lot of the public sector in Britain was profitable. Consequently, in 1984, public companies contributed over 7 billion pounds to the treasury. All that money is now going to private shareholders. Service in the privatised industries is now often disastrous–the Financial Times reported an invasion of rats in the Yorkshire Water system and anyone who has survived taking Thames trains in Britain deserves a medal.

    Exactly the same mechanisms have been at work throughout the world. In Britain, the Adam Smith Institute was the intellectual partner for creating the privatisation ideology. USAID and the World Bank have also used Adam Smith experts and have pushed the privatisation doctrine in the South. By 1991 the Bank had already made 114 loans to speed the process, and every year its Global Development Finance report lists hundreds of privatisations carried out in the Bank’s borrowing countries.

    I submit that we should stop talking about privatisation and use words that tell the truth: we are talking about alienation and surrender of the product of decades of work by thousands of people to a tiny minority of large investors. This is one of the greatest hold-ups of ours or any generation.

    Another structural feature of neo-liberalism consists in remunerating capital to the detriment of labour and thus moving wealth from the bottom of society to the top. If you are, roughly, in the top 20 percent of the income scale, you are likely to gain something from neo-liberalism and the higher you are up the ladder, the more you gain. Conversely, the bottom 80 percent all lose and the lower they are to begin with, the more they lose proportionally.

    Lest you thought I had forgotten Ronald Reagan, let me illustrate this point with the observations of Kevin Phillips, a Republican analyst and former aid to President Nixon, who published a book in 1990 called The Politics of Rich and Poor. He charted the way Reagan’s neo-liberal doctrine and policies had changed American income distribution between 1977 and 1988. These policies were largely elaborated by the conservative Heritage Foundation, the principle think-tank of the Reagan administration and still an important force in American politics. Over the decade of the 1980s, the top 10 percent of American families increased their average family income by 16 percent, the top 5 percent increased theirs by 23 percent, but the extremely lucky top 1 percent of American families could thank Reagan for a 50 percent increase. Their revenues went from an affluent $270.000 to a heady $405.000. As for poorer Americans, the bottom 80 percent all lost something; true to the rule, the lower they were on the scale, the more they lost. The bottom 10 percent of Americans reached the nadir: according to Phillip’s figures, they lost 15% of their already meagre incomes: from an already rock-bottom average of $4.113 annually, they dropped to an inhuman $3.504. In 1977, the top 1 percent of American families had average incomes 65 times as great as those of the bottom 10 percent. A decade later, the top 1 percent was 115 times as well off as the bottom decile.

    America is one of the most unequal societies on earth, but virtually all countries have seen inequalities increase over the past twenty years because of neo-liberal policies. UNCTAD published some damning evidence to this effect in its 1997 Trade and Development Report based on some 2600 separate studies of income inequalities, impoverishment and the hollowing out of the middle classes. The UNCTAD team documents these trends in dozens of widely differing societies, including China, Russia and the other former Socialist countries.

    There is nothing mysterious about this trend towards greater inequality. Policies are specifically designed to give the already rich more disposable income, particularly through tax cuts and by pushing down wages. The theory and ideological justification for such measures is that higher incomes for the rich and higher profits will lead to more investment, better allocation of resources and therefore more jobs and welfare for everyone. In reality, as was perfectly predictable, moving money up the economic ladder has led to stock market bubbles, untold paper wealth for the few, and the kind of financial crises we shall be hearing a lot about in the course of this conference. If income is redistributed towards the bottom 80 percent of society, it will be used for consumption and consequently benefit employment. If wealth is redistributed towards the top, where people already have most of the things they need, it will go not into the local or national economy but to international stockmarkets.

    As you are all aware, the same policies have been carried out throughout the South and East under the guise of structural adjustment, which is merely another name for neo-liberalism. I’ve used Thatcher and Reagan to illustrate the policies at the national level. At the international level, neo-liberals have concentrated all their efforts on three fundamental points:

    free trade in goods and services
    free circulation of capital
    freedom of investment
    Over the past twenty years, the IMF has been strengthened enormously. Thanks to the debt crisis and the mechanism of conditionality, it has moved from balance of payments support to being quasi-universal dictator of so-called “sound” economic policies, meaning of course neo-liberal ones. The World Trade Organisation was finally put in place in January 1995 after long and laborious negotiations, often rammed through parliaments which had little idea what they were ratifying. Thankfully, the most recent effort to make binding and universal neo-liberal rules, the Multilateral Agreement on Investment, has failed, at least temporarily. It would have given all rights to corporations, all obligations to governments and no rights at all to citizens.

    The common denominator of these institutions is their lack of transparency and democratic accountability. This is the essence of neo-liberalism. It claims that the economy should dictate its rules to society, not the other way around. Democracy is an encumbrance, neo-liberalism is designed for winners, not for voters who, necessarily encompass the categories of both winners and losers.

    Skippy… Libertarians are like benign church goers… they afford the clergy – priesthood a legitimacy smoke screen… veiling the the vile deeds done… to successive generations of children.

    The benign church goers may practice what they believe in earnest – (intense conviction of non aggression) – I have no personal quarrel with these people. It is the ruling class of neoliberal clergy and priests I fix my gaze upon.

      1. skippy

        More like basting… feel like I just jumped out of a air conditioned C-141 into Savannah after a month or so in Alaska.

        Skippy… the first few breaths are like drowning…

  23. skippy

    More good stuff……

    Neoliberalism Is…
    Neoliberalism, in theory, is essentially about making trade between nations easier. It is about freer movement of goods, resources and enterprises in a bid to always find cheaper resources, to maximize profits and efficiency.

    To help accomplish this, neoliberalism requires the removal of various controls deemed as barriers to free trade, such as:

    Certain standards, laws, legislation and regulatory measures
    Restrictions on capital flows and investment
    The goal is to be able to to allow the free market to naturally balance itself via the pressures of market demands; a key to successful market-based economies.

    As summarized from What is “Neo-Liberalism”? A brief definition for activists by Elizabeth Martinez and Arnoldo Garcia from Corporate Watch, the main points of neoliberalism includes:

    The rule of the market — freedom for capital, goods and services, where the market is self-regulating allowing the “trickle down” notion of wealth distribution. It also includes the deunionizing of labor forces and removals of any impediments to capital mobility, such as regulations. The freedom is from the state, or government.
    Reducing public expenditure for social services, such as health and education, by the government
    Deregulation, to allow market forces to act as a self-regulating mechanism
    Privatization of public enterprise (things from water to even the internet)
    Changing perceptions of public and community good to individualism and individual responsibility.
    Overlapping the above is also what Richard Robbins, in his book, Global Problems and the Culture of Capitalism (Allyn and Bacon, 1999), summarizes (p.100) about some of the guiding principles behind this ideology of neoliberalism:

    Sustained economic growth is the way to human progress
    Free markets without government “interference” would be the most efficient and socially optimal allocation of resources
    Economic globalization would be beneficial to everyone
    Privatization removes inefficiencies of public sector
    Governments should mainly function to provide the infrastructure to advance the rule of law with respect to property rights and contracts.
    At the international level then we see that this additionally translates to:

    Freedom of trade in goods and services

    Freer circulation of capital

    Freer ability to invest

    The underlying assumption then is that the free markets are a good thing. They may well be, but unfortunately, reality seems different from theory. For many economists who believe in it strongly the ideology almost takes on the form of a theology. However, less discussed is the the issue of power and how that can seriously affect, influence and manipulate trade for certain interests. One would then need to ask if free trade is really possible.

    From a power perspective, “free” trade in reality is seen by many around the world as a continuation of those old policies of plunder, whether it is intended to be or not. However, we do not usually hear such discussions in the mainstream media, even though thousands have protested around the world for decades.

    Today then, neoliberal policies are seeing positives and negatives. Under free enterprise, there have been many innovative products. Growth and development for some have been immense. Unfortunately, for most people in the world there has been an increase in poverty and the innovation and growth has not been designed to meet immediate needs for many of the world’s people. Global inequalities on various indicators are sharp. For example,

    Some 3 billion people — or half of humanity — live on under 2 dollars a day
    86 percent of the world’s resources are consumed by the world’s wealthiest 20 percent (See this site’s page on poverty facts for many more examples.)

    Joseph Stiglitz, former World Bank Chief Economist (1997 to 2000), Nobel Laureate in Economics and now strong opponent of the ideology pushed by the IMF and of the current forms of globalization, notes that economic globalization in its current form risks exacerbating poverty and increasing violence if not checked, because it is impossible to separate economic issues from social and political issues.

  24. skippy

    Even MORE….

    As a university lecturer I often find that my students take today’s dominant economic ideology – namely, neoliberalism – for granted as natural and inevitable. This is not surprising given that most of them were born in the early 1990s, for neoliberalism is all that they have known. In the 1980s, Margaret Thatcher had to convince people that there was “no alternative” to neoliberalism. But today this assumption comes ready-made; it’s in the water, part of the common-sense furniture of everyday life, and generally accepted as given by the Right and Left alike. It has not always been this way, however. Neoliberalism has a specific history, and knowing that history is an important antidote to its hegemony, for it shows that the present order is not natural or inevitable, but rather that it is new, that it came from somewhere, and that it was designed by particular people with particular interests.

  25. skippy

    Its damn near endless…

    Future historians may well look upon the years 1978–80 as a revolutionary turning-point in the world’s social and economic history. In 1978, Deng Xiaoping took the first momentous steps towards the liberalization of a communist-ruled economy in a country that accounted for a fifth of the world’s population. The path that Deng defined was to transform China in two decades from a closed backwater to an open center of capitalist dynamism with stained growth rates unparalleled in human history.

    On the other side of the Pacific, and in quite different circumstances, a relatively obscure (but now renowned) figure named Paul Volcker took command at the US Federal Reserve in July 1979, and within a few months dramatically changed monetary policy. The Fed thereafter took the lead in the fight against inflation no matter what its consequences (particularly as concerned unemployment). Across the Atlantic, Margaret Thatcher had already been elected Prime Minister of Britain in May 1979, with a mandate to curb trade union power and put an end to the miserable inflationary stagnation that had enveloped the country for the preceding decade.

    Then, in 1980, Ronald Reagan was elected President of the United States and, armed with geniality and personal charisma, set the US on course to revitalize its economy by supporting Volcker’s moves at the Fed and adding his own particular blend of policies to curb the power of labour, deregulate industry, agriculture, and resource extraction, and liberate the powers of finance both internally and on the world stage. From these several epicentres, revolutionary impulses seemingly spread and reverberated to remake the world around us in a totally different image.

    Transformations of this scope and depth do not occur by accident. So it is pertinent to enquire by what means and paths the new economic configuration––often subsumed under the term ‘globalization’––was plucked from the entrails of the old. Volcker, Reagan, Thatcher, and Deng Xaioping all took minority arguments that had long been in circulation and made them majoritarian (though in no case without a protracted struggle). Reagan brought to life the minority tradition that stretched back within the Republican Party to Barry Goldwater in the early 1960s. Deng saw the rising tide of wealth and influence in Japan, Taiwan, Hong Kong, Singapore, and South Korea and sought to mobilize market socialism instead of central planning to protect and advance the interests of the Chinese state. Volcker and Thatcher both plucked from the shadows of relative obscurity a particular doctrine that went under the name of ‘neoliberalism’ and transformed it into the central guiding principle of economic thought and management.
    And it is with this doctrine––its origins, rise, and implications –– that I am here primarily concerned.

    Skippy… Neo – liberalism is just a white guy club… dressed up as a market religion… that is inclusive of non whites.

    1. skippy

      PS. as long as the non white and low ranking white participants are on the debt side of the equation. See stagnate wages since its inception.

  26. Schofield

    Skippy maybe it’s easier than you think. Human nature is ambivalent especially that of politicians.

  27. Schofield

    And here’s precisely where the whole of Hayek’s predominantly Libertarian ideology falls apart in this passage contained in his essay “The Use of Knowledge”

    “It is with respect to this that practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active cooperation.”

    And the key words are “beneficial use” since this can only be obtained in the marketplace if every individual has a Living Wage and this can only be obtained by the political processes of democracy both within government and the workplace. These are the outcomes of Alan Gewirth’s Principle of Generic Consistency detailed in his book “Reason and Morality” and Raymond Plant’s development of this Principle in his criticism of Neo-Liberal ideology in his book “The Neo-liberal State.”

  28. Cecil-Louis Ulysses

    An obvious observation:

    The right asks us to fear the government, and the left asks us to fear corporate power.

    To what extent do any of us let our streams of consciousness get swept up in these two channels? Metaphor is like biological warfare, insidious — but I didn’t start it. What’s up with ”right” and ”left”?

    And a questions for those whose posts I have skimmed with a lot of interest but not a lot of time and to whomever, obviously:

    Allow me to assume you are bothered by something in the world and you are concerned about it, why are you concerned about, why is it bad, or whatever, and what do you propose to do about it?

    Then a follow-up? Or an alternative: Perhaps you are not concerned about some wrong in the world, but rather you grieve that the world is missing out on something nice, and you sense there may be some way of supplying it? Well?

    An obvious observation: Some thoughts are directed toward something missing and some over something objectionable. It seems we might call both one or the other ”positive” or ”negative,” but it does seem like one can draw a distinction between the two, for what’s that worth, I don’t know.

    Finally, what is anyone’s criteria that guides their advice and interests and desires? Er, what drives you? Pretend you are talking to Socrates, since I will not be available to answer, and speak to him as long as you can stand — we all give up on him eventually!!!!!!!!!!!!!!!!!!!

    Finally, my two cents is — don’t let the bastards get you down!! (Or if you want be pedantic, wink wink, Illegitimi non carborundum!)

    No, finally, my final thing is another question. Is it “one for all” or “all for one,” and are you on the side of a single individual or one the side of something inevitably more powerful than that.

    Finally, you know, there is still something else as well, in a stream of non sequiturs, it is my reading that the fellow Jesus was on the side of that one individual, and unlike the impoverished ideology of some on the right, it wasn’t himself, and much like the impoverished ideology of many on the left, it was the less fortunate of any candidates, but then unlike the same, it was one and only one such individual, taken singly somehow?, that he was interested in, if you will permit me to interpret the word ”neighbor” in exactly this fashion. And so you can have a guide for political, economic, etc, those words which stand for the same thing, and which serve as modifiers of, and I have to finish this sentence alas with some object, I will let it be this one: :).

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