How Neoliberalism Was Born, Part 1

Theory always precedes praxis by a few decades. Neoliberalism as a set of ideas wasn’t born in 1978. It was born in 1947, and as any birth, this one was preceded by a period of gestation. Throughout the 1950s, these ideas became the shiny new thing that students of economics everywhere wanted to learn. In the 1960s, the number of economists who had high-ranking government positions and who were curious to put these ideas in practice reached critical mass. All they needed was a pretext. When a system works, inertia sets in and nobody wants to start something completely new. The 1970s provided that pretext.

What were the ideas I’m talking about? Initially, they were nothing too controversial. The original neoliberals believed that too much of state meddling in the economy wasn’t a good thing. In itself, it’s not a bad idea. It’s when it gets to the point of national borders being erased and Justin Trudeau shredding the Charter of Rights and Freedoms that we notice and say, “wait, what?” But it’s simply a logical progression of the idea that the state is too powerful. Who guarantees your rights and freedoms? You can argue that they are yours by natural right but you still need an agency to make them real. In mature neoliberalism, the state doesn’t go away. It simply switches sides. It’s no longer in the business of protecting you from the vagaries of the economy. It’s now in the business of protecting the market from you. Your desire freely to dispose of your body is in conflict with Pfizer’s right to increase its profits. And the state brings its entire might to crush you and benefit Pfizer.

I’ll continue in the next post but before I do that I want to ask readers to abstain from saying that I’m simplifying. Of course, I’m simplifying. There are hundreds of volumes written about this. I have read and annotated several dozen of them. There’s nothing more annoying than a person who is asked a question and instead of answering gives you a bibliography. I’m an academic. My job is to disseminate knowledge and that’s what I’m doing here. Nobody has the time to read 56 scholarly tomes on neoliberalism except for the people who are paid to do it. I’m one of those people and I want to share the fruits of my learning with people who are busy doing other things.

13 thoughts on “How Neoliberalism Was Born, Part 1

  1. ” protecting the market from you”

    So, roughly speaking it went from the ideal of protecting private businesses from government overreach and then morphed into protecting some businesses at the expense of others and is now protecting some businesses from the public (I would say citizenry but that’s not a word with a lot of meaning at present….).

    Would Obama’s decision to protect wall street at the expense of millions of people’s houses be a kind of turning point? It felt like a turning point….

    Liked by 1 person

    1. Obama was a typical neoliberal but nobody among his critics had the brains to understand it. They accused him of being “a socialist” and “a Marxist.” This was an utterly ineffective line of attack that was based on an outdated emotionalism and not on any actual reality.


      1. The Republican critics of Obama were the ones who accused him of being a Marxist and a socialist, and it was quite effective with their base. Think of someone outside of your academia bubble without a college education. Do you really think calling Obama a neoliberal would have meant much to them or meant something different from “liberal”?

        And now you have me defending Obama’s Republican critics, but I think the main explanation is not that they weren’t smart enough but that you weren’t their target audience.

        Liked by 1 person

  2. I might add as well that late 2009 was when the EU definitively morphed into third-stage neoliberalism.

    The decision to protect private German banks during the Greek debt “crisis” at the expense of the Greek public was definitely a turning point.

    Liked by 1 person

      1. “Protecting the Germans at the expense of the Greeks ”

        It wasn’t the German public that was being protected but some private banks. Germany also has a sizeable precarious population (especially among the young).

        Liked by 1 person

        1. Colonialism often worked for the benefit of private interests in the colonizing power. There were plenty of poor people in Victorian Britain.


          1. “Colonialism”

            So you’re taking the Brexit position that the EU has become a system for the German colonization of Southern and Eastern Europe?

            I’m not against that interpretation per se but I think it comes from the German problem… a combination of factors more or less guarantees that Germany will come to dominate any European system it takes part in leading to resistance against German power and push back from Germany in order to solidy its position.

            But again 2009 seems to be the dividing line…. before that the EU had done more to alleviate poverty than any international organization…. that’s over.

            The cursed pseudo-currency known as the Euro also played a role of course (the idea that Germany and Spain and Greece could share a currency without any kind of common fiscal policy or economic transfers between states is just…. dumb. But the EU was (and remains) totally committed to the idea.


            1. Yes, I see this as the heart of the matter. In the US poorer states can potentially receive federal funding for welfare and development. Without a similar mechanism, the EU seems extremely unfair on its less developed members.


              1. ” the EU seems extremely unfair on its less developed members”

                By now I’m assuming that’s a feature and not a bug. Part of the project is forcing younger, smarter, more ambitious people north from southern member states.
                I remember a show on Spanish tv (Spanish people in the world) lots of young professionals forced to move by the labor market.
                Either the leadership of the EU is completely blind to the consequences of their policies or… those are the policies they want….


              2. It’s absolutely a feature and I was just the other day looking at research saying precisely this. I’ll post a quote when I get back to the office


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