Nineteenth century liberals sought to limit state involvement in economic activity under the banner of “Laissez-faire”, although the expression is a simplification of Adam Smith’s identification of private interest with public interest,
But support for unfettered Capitalism waned among economists and the public in the face of the Great Depression, the New Deal, and the outbreak of the Second World War. Capitalism, in the form of free markets, did not seem able to avert sharp cycles of “boom or bust”, and seemed to require some forms of state planning — even to the critics of planning. John Maynard Keynes, the prime exponent of judicious economic management, sought to save the market system from its worst excesses. “For my part,” he explained, “I think that Capitalism, wisely managed, can probably be made more efficient for achieving economic ends than any alternative system yet is sight, but that in itself, it is in many ways extremely objectionable.” (The End of Laissez-faire, 1927).
In The Great Persuasion, Angus Burgin documents the rehabilitation and triumphant reassertions of market thinking since the Depression that have come to be known as Neo-liberalism. After the Second World War, a group of academic critics of government intervention sought to check the growth of postwar collectivization and the burgeoning welfare state, which they described as the politicizing of life through bigger government, with public decisions replacing private responsibilities, and the erosion of long‐held freedoms.
They succeeded in forming small networks and to hold international meetings. Just before the outbreak of the war, they met in Paris to discuss Walter Lippman’s book The Good Society, and after the war formed the Mont Pelerin Society, that first met in Switzerland in 1947, under the leadership of Friedrich Hayek. The organization was named after the meeting place near the Mont Pèlerin, (but the accent grave was eliminated from the name). They would go on to establish major institutional bases, notably at the University of Chicago, and between 1930 and 1970, they succeeded in forming a network of associations, foundations, and political policies that have given form to modern conservatism.
But as Burgin warns us, “the ‘neoliberalism’ that became paradigmatic in the Anglo-American policy arena in the 1970’s and 1980’s looked very different from the “neoliberalism” of the late 1930’s and 1940’s.” (p.82) In the early years, the Mont Pelerin society was both international and interdisciplinary. Its members recognized the need to critique “classical” liberal ideas, and while they were generally opposed to government intervention, they sought to articulate a worldview that would both defend free markets and establish ethical paradigms for a stable and productive social order. (Burgin, p.149) Their watchwords included “free exchange, freedom of prices, free competition, the fight against monopoly, balanced budget, monetary stability, international multilateralism, etc.”
Its members nonetheless recognized that certain tasks were best handled by the state, rather than by markets. These included national defense, social insurance, social services, education, and scientific research — all of which would be subsequently called into question as well.
In later years, the society’s membership tilted further towards economists. The ideological divide between “freedom” and “collectivism” hardened into Cold War dualism, and earlier reticence about engaging directly in policy discussion was replaced by public advocacy . The fundamental argument that Hayek made in The Road to Serfdom had been that many countries in 1940's were moving steadily away from capitalism and toward socialism and that this would inevitably mean the transition from democratic governments to totalitarian regimes, and so the end of liberalism. Milton Friedman would become the leading figure of this shift into public opinion-making. Paul Krugman described him as “the best spokesman for the virtues of free markets since Adam Smith,” but went on to add that “he slipped all too easily into claiming both that markets always work and that only markets work. It’s extremely hard to find cases in which Friedman acknowledged the possibility that markets could go wrong, or that government intervention could serve a useful purpose.” (“Who was Milton Friedman”, NYRB, 2/15/2007)"
Neo-liberal rationality, while foregrounding the market, is not only or even primarily focused on the economy; rather it involves extending and disseminating market values to all institutions and social action. Likewise, the extreme inequality that this market freedom produces is not merely unavoidable, Hayek argues, but desirable, since inequality allows the privileged to pioneer new ways of life and to marshal resources leading to civilizational advance.
By the 1970’s and 80’s it was becoming clear that the consistent purpose of neoliberalism was to “promote capitalist imperatives against countervailing democratic ones” by espousing “Market Fundamentalism”, curtailing the reach of political power in the name of freedom, repealing the “regulatory state” that promoted public goods, and limiting the political voice of the people (Wendy Brown, In the Ruins of Neoliberalism) Ronald Reagan and Margaret Thatcher rolled out programs that centered on deregulating capital, breaking organized labor, privatizing public goods and services, reducing progressive taxation, and shrinking the social state. (p.18) The very idea of society and of political equality were rejected as interference in markets and assaults on freedom. Thatcher famously declared society nonexistent (“There is no such thing as society”). There are only individuals who are the entrepreneurs of their own lives. They are free to compete and accumulate. As Hayek puts it, true freedom is freedom to starve. For Hayek, the actual effects of the freedom he recommends on individuals are quite independent of its essential virtue. Indeed, “to be free may mean freedom to starve, to make costly mistakes, or to run mortal risks”
Underlying the “Washington consensus were the assumptions that markets were always efficient and productive, that all growth was good growth and that globally, more of it would mean more prosperity and inevitably a liberalization of the world’s more autocratic and repressive regimes.
The primary value of neo-liberalism is “freedom”, understood as freedom from the coercion inherent in social regulation. (the free market) For the theorists (ideologues) of neo-liberalism such as Friedrich Hayek (the Road to Serfdom) and the proponents of the “Chicago School” such as Milton Friedman, any limitation to market freedom is a step towards political and personal un-freedom. Hence, the rejection of environmental regulation, all social “safety nets, or tolerance for unions, is rejected on fundamental grounds.
“Market Fundamentalism” is the view that “that strong property rights and private contracting rights are the best means to increase overall welfare, with the sole justification for “political intervention” being to “correct market failures”. Based on the belief that strong property rights best protect the equal freedom and dignity of individuals, a commercial social order governed by the market is then considered the most decent society that is possible to achieve, and that “There is no alternative” (TINA) to the market-fundamentalist agenda.
neoliberalismIts proponents argue that alternatives to the “market-fundamentalist” agenda are futile, that some items are “off the table”, to use Margaret Thatcher’s phrase.
For these authors, “The questions that neoliberalism addresses at the deepest level, then, are not How much market?, or How much governance?, but which interests will enjoy protection, whether as property rights, constitutional immunities, or objects of special regulatory solicitude, and which others will be left vulnerable or neglected?” At least some of the political strength of neoliberalism and its success in attacking the welfare state derives from pairing sudden ruthlessness with a willingness to wage a decades-long war of ideas.
From the mid-1990s, the term was applied to various national reforms but also increasingly associated with phenomena of an international scale. Neoliberalism began to designate the globalisation of a market economy that had become unstable, characterised by deregulation, financial speculation and a return to capitalism presented as “unbridled”. In the post-Cold-War world, few countries or regions seemed to be spared so-called neoliberal policies. From the end of the 1990s, anti-neoliberalism became the rallying cry of the left-wing alterglobalist movement, and both left- and right-wing separatists, in denouncing the perceived extremes and failings of economic globalisation
For almost forty years, what George Soros calls “market fundamentalism” has threatened the very idea of government: the planning, taxation, and long-term deliberative vision essential to sustainable climate policy. This is more than a matter of corruption: it is a fundamental undermining of politics by the ideological triumph of neoliberalism, of the view that government is the problem, not the solution, while the market— seen by democracy as the problem— is the solution. But Neo-liberalism, which has held sway over the political imagination for almost five decades, is clearly showing signs of decline, at least as a political ideology. the current situation entails a world-wide reaction to the societal and planetary crises that the era of neo-liberal governance produced. It is in this context of crisis and future possibility that a new order of governance is taking shape.
“Blaming capitalism is a stratagem of failed democracy. Capitalism unleashed and markets unhinged are a function of democracy incapacitated.” (Barber)