Via New Left Project, London School of Economics professor Jason Hickel on the 1980s rise of neoliberalism — the belief system that defines our reality:
I often find that my students take today’s dominant economic ideology – namely, neoliberalism – for granted as natural and inevitable. This is not entirely 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. Today, this assumption comes ready-made; it’s in the water, part of the common-sense furniture of everyday life.
If an economist living in the 1950s had seriously proposed any of the ideas and policies in today’s standard neoliberal toolkit, they would have been laughed right off the stage. As Susan George has put it, “That the market should be allowed to make major social and political decisions; that the State should voluntarily reduce its role in the economy, or that corporations should be given total freedom – such ideas were utterly foreign to the spirit of the time.”
The neoliberal model was made – intentionally – by specific people. And because it was made by people, then it can be undone by people. It is not a force of nature, and it is not inevitable; another world is in fact possible.
Popular resistance against neoliberalism has mounted since the financial crisis of 2008. Not only did the crisis expose the flaws of extreme deregulation, but conservative policymakers have sought to leverage the recession to justify unprecedented austerity measures in the name “deficit reduction”, including deep cuts to healthcare, education, affordable housing, food stamps, and other social programs (while funnelling trillions of taxpayer dollars to private banks). In other words, policymakers hope to fix the crisis of neoliberal capitalism by prescribing yet more neoliberalism. This is true not only in the United States but across Europe as well. Not surprisingly, this naked power grab has spurred the rise of new social movements like Occupy Wall Street, the “indignados” in Spain and Greece, and in Britain the biggest spate of student protests and labor strikes for over fifty years.
We need to reclaim the idea of freedom. We have to reject the neoliberal version of freedom as market deregulation, which is really just license for the rich to accumulate and exploit, and license for the few to gain at the expense of the many.
Embedded liberalism delivered high growth rates through the 1950s and 1960s – mostly in the industrialized West, but also in many postcolonial nations. By the early 1970s, however, embedded liberalism was beginning to face a crisis of “stagflation”, which means a combination of high inflation and economic stagnation. Economists debate the reasons for stagflation during this period. Progressive scholars such as Paul Krugman point to two factors. First, the high cost of the Vietnam War left the US with a balance-of-payments deficit – the first of the 20th century – to the point where worried international investors began to offload their dollars, which set inflation rates rising. Second, the oil crisis of 1973 drove prices up and caused production and economic growth to slow down, leading to stagnation. By contrast, conservative scholars hold that stagflation was a consequence of onerous taxes on the wealthy and too much economic regulation, claiming that it represented the inevitable endpoint of embedded liberalism and justified scrapping the whole system.
Read the history of neoliberalism at New Left Project