Financial
meltdown, environmental disaster and even the rise of Donald Trump –
neoliberalism has played its part in them all. Why has the left
failed to come up with an alternative?
by George
Monbiot
PART 2
The term
neoliberalism was coined at a meeting in Paris in 1938. Among the
delegates were two men who came to define the ideology, Ludwig von
Mises and Friedrich Hayek. Both exiles from Austria, they saw social
democracy, exemplified by Franklin Roosevelt’s New Deal and the
gradual development of Britain’s welfare state, as manifestations
of a collectivism that occupied the same spectrum as nazism and
communism.
In The Road
to Serfdom, published in 1944, Hayek argued that government planning,
by crushing individualism, would lead inexorably to totalitarian
control. Like Mises’s book Bureaucracy, The Road to Serfdom was
widely read. It came to the attention of some very wealthy people,
who saw in the philosophy an opportunity to free themselves from
regulation and tax. When, in 1947, Hayek founded the first
organisation that would spread the doctrine of neoliberalism – the
Mont Pelerin Society – it was supported financially by millionaires
and their foundations.
With their
help, he began to create what Daniel Stedman Jones describes in
Masters of the Universe as “a kind of neoliberal international”:
a transatlantic network of academics, businessmen, journalists and
activists. The movement’s rich backers funded a series of
thinktanks which would refine and promote the ideology. Among them
were the American Enterprise Institute, the Heritage Foundation, the
Cato Institute, the Institute of Economic Affairs, the Centre for
Policy Studies and the Adam Smith Institute. They also financed
academic positions and departments, particularly at the universities
of Chicago and Virginia.
As it
evolved, neoliberalism became more strident. Hayek’s view that
governments should regulate competition to prevent monopolies from
forming gave way – among American apostles such as Milton Friedman
– to the belief that monopoly power could be seen as a reward for
efficiency.
Something
else happened during this transition: the movement lost its name. In
1951, Friedman was happy to describe himself as a neoliberal. But
soon after that, the term began to disappear. Stranger still, even as
the ideology became crisper and the movement more coherent, the lost
name was not replaced by any common alternative.
At first,
despite its lavish funding, neoliberalism remained at the margins.
The postwar consensus was almost universal: John Maynard Keynes’s
economic prescriptions were widely applied, full employment and the
relief of poverty were common goals in the US and much of western
Europe, top rates of tax were high and governments sought social
outcomes without embarrassment, developing new public services and
safety nets.
But in the
1970s, when Keynesian policies began to fall apart and economic
crises struck on both sides of the Atlantic, neoliberal ideas began
to enter the mainstream. As Friedman remarked, “when the time
came that you had to change ... there was an alternative ready there
to be picked up”. With the help of sympathetic journalists and
political advisers, elements of neoliberalism, especially its
prescriptions for monetary policy, were adopted by Jimmy Carter’s
administration in the US and Jim Callaghan’s government in Britain.
After
Margaret Thatcher and Ronald Reagan took power, the rest of the
package soon followed: massive tax cuts for the rich, the crushing of
trade unions, deregulation, privatisation, outsourcing and
competition in public services. Through the IMF, the World Bank, the
Maastricht treaty and the World Trade Organisation, neoliberal
policies were imposed – often without democratic consent – on
much of the world. Most remarkable was its adoption among parties
that once belonged to the left: Labour and the Democrats, for
example. As Stedman Jones notes, “it is hard to think of another
utopia to have been as fully realised.”
Source:
http://www.theguardian.com/books/2016/apr/15/neoliberalism-ideology-problem-george-monbiot
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