Conservative economic theory (which encompasses libertarian economic views) is best viewed as a moral philosophy, which in turn necessitates and drives a political philosophy that the government is the enemy of freedom, and to safeguard of individual rights, the ‘market’ must be unencumbered by the authority of the state. A clear and comprehensive introduction to modern conservative, or ‘neoliberal’ economics is found here:
The road from Mont-pèlerin: The Making of the Neoliberal Thought Collective/ Philip Mirowski & Dieter Plehwe, eds.
Social movements protesting against corporate globalization have blamed the United States for most, if not all, of the neoliberal misdeeds around the globe during recent decades. Nevertheless, one feels tempted to ask: “Why is there no neoliberalism in the United States?” invoking the analogy to Werner Sombart’s famous question pointing to the absence of (European-style) socialism in the New World. Indeed, the term neoliberalism is hardly ever used to describe the U.S. configuration of “free market” forces, which mostly sail under the flags of libertarianism and neoconservatism. A prominent insider in U.S. neoconservative circles, Edwin J. Feulner of the Heritage Foundation,has felt compelled to clarify usage of the term in the United States. He maintains that the neoliberal intellectuals’ Mont Pèlerin Society was founded “to uphold the principles of what Europeans call ‘liberalism’ (as opposed to ‘statism’)and what we Americans call ‘conservatism’ (as opposed to ‘liberalism’):free markets, limited governments, and personal liberty under the rule of law”(Feulner 1999, 2).1 Unlike socialism, neoliberalism flourished in the United States, even if it was more obscured here than elsewhere in the world. (pg. 2)
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The various groups of neoliberals that joined the MPS from different countries and professional backgrounds were driven by the desire to learn howto effectively oppose what they summarily described as collectivism and socialism,and to develop an agenda diverging from classical liberalism. Scholars from different disciplines shared their expertise and debated with a select group of journalists, corporate leaders, and politicians, as well as a new breed of knowledge professionals (operating out of the rapidly proliferating neoliberal partisan think tanks). Each of these groups contributed its special resources and competencies to the collective effort. The whole truly was more than the sum of its parts, constituting complex and efficient knowledge machinery. (pg. 6)
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Both the term and the concept of neoliberalism enjoyed a long prehistory in twentieth-century political and economic thought.15 Probably the first foray into the twentieth-century reconsideration of the problems of how to secure a free market and to appropriately redefine the functions of the state in order to attain that goal—the key concern of MPS neoliberalism—can be found in the book Old and New Economic Liberalism by the well-known Swedish economist Eli F. Heckscher, written in 1921. While his student and collaborator in founding international trade theory, Bertil Ohlin (the Heckscher-Ohlin factor proportion model), served as head of the Liberal Party in Sweden from 1944 until 1967, Hekscher was among the second group of people invited to join the neoliberal Mont Pèlerin Society in 1947. The term neoliberalism, in the modern sense,16 probably appeared for the first time in 1925 in a book entitled Trends of Economic Ideas, written by the Swiss economist Hans Honegger… Neoliberalism propagated doctrines of competition and entrepreneurship, and posited the rejection of advancing socialist ideas and bolshevism in particular (pp. 10-11)
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The publication of Walter Lippmann’s (An Inquiry into the Principles of)The Good Society in 1937 marked the beginning of a new dawn in the history of neoliberalism. The book was enthusiastically welcomed by the liberal intellectuals in Europe, perhaps even more so than in America (Steel 1980). Lippmann’score message was the superiority of the market economy over state intervention, a principle that was (to say the least) leaning against the wind in the depths of the Great Depression. The book was brimming with insights that would later constitute the conventional wisdom in neoliberal circles, notably:
In a free society the state does not administer the affairs of men. It administers justice among men who conduct their own affairs.
[Statesmanship] is the ability to elucidate the confused and clamorous interests which converge upon the seat of government. It ... consists in giving the people not what they want but what they will learn to want.22
Lippmann anticipated not only some principles, but also elements, of Friedrich Hayek’s long-term strategy: Only steadfast, patient, and rigorous scientific work, as well as a revision of liberal theory, was regarded as a promising strategy to defeat “totalitarianism.” (pg. 13)
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While original Chicago School liberals like Simons insisted that the courts apply clear criteria—the rule of the law—rather than the vague rule of reason, the emerging neoliberal law and economics doctrine—developed byMPS member Henry G. Manne and financed by the Olin Foundation (compare Miller 2006)—demanded an entirely new approach. This new approach was at odds with the neoliberal emphasis on the rule of law: judges should instead be educated to apply a rule of (neoliberal) economic reason perspective. (pg 31)
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As part of his larger campaign to warn the Western world about the imminent threat of left-wing totalitarianism, Friedrich Hayek (then still an economist at the London School of Economics) delivered a lecture at the Economic Club in Detroit, Michigan on April 23, 1945.1 He was on a book tour promoting his surprise best-seller, The Road to Serfdom (1944). In Detroit he proselytized: “I think there is a great educational task to be fulfilled. We must make the masses of people learn and understand the problem that is before us, make them capable of discriminating between methods which will achieve the end and methods which are empty promises, and particularly tell them that there may be desperate palliatives like inflationary measures which in the short run may keep employment high, but in the long run make the situation much more difficult than it was before.” Within two days of the event, Hayek met with the businessman Harold Luhnow—then president of the Volker Fund—in Chicago. Luhnow offered to provide financial support for Hayek in his educational quest, since he too had been searching for intellectual weapons to curb the power of government in the postwar era. (pp.140-1)
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Hayek also enclosed a copy of the Outline of Organization for the Proposed “Free Market Study,”dated May 23, 1946.41 The prospective Free Market Study sought to define the political promise of a new, more economically oriented liberalism: “The free market [is] the most efficient organizer of economic activity—[the Study will] emphasize and explain that the free market is systemic, rational, not chaotic or disorderly— show how the free market performs some of the more difficult functions, such as allocating resources to their best use and distributing consumption through time.” The project also intended to examine the relationship between the free market and political and personal freedom. For our purposes, however, it is more important to note that under the rubric of “the promise of the free market,”the outline identified both private monopoly and public regulation as “The Menace to the Free Market,” with the latter being deemed more “dangerous.”42 (pg. 152)
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Once we acknowledge Friedrich Hayek’s pivotal role in getting the Chicago School up and running by the fall of 1946, and then turn our attention to the first meeting of the Mont Pèlerin Society in Vevey, Switzerland, in April 1947, we can begin to appreciate the extent to which the dual start-ups of the two landmarks of the history of postwar neoliberal thought were intimately connected.64 The MPS is generally regarded as the central locus of the development of neoliberal doctrine in the postwar world. Yet we observe that Hayek provided both the intellectual impetus and the organizational spade work for both the Chicago School and the MPS… (pp. 158-9)
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That MPS and the Chicago School were joined at the hip from birth is verified by the fact that most of the major protagonists were present at the creation of both organizations: Director, Friedman, Wallis, and Knight.68 When the MPS was legally constituted, it was registered as a nonprofit corporation in Illinois, with offices formally listed as located in the University of Chicago Law School; Allen Wallis served as treasurer during the initial phase of1948–1954 (Hartwell 1995, 45). But more importantly, just as in the Free Market Study at Chicago, the areas of expertise covered by the MPS were consciously expanded well outside any notional boundaries of disciplinary economics in the 1940s as a technical subject. Law, religion, history, and scientific philosophy would be as relevant as economics in the search for a rejuvenated liberal creed. This was exemplified in the six core principles enunciated at the founding of MPS:
1. The analysis and explanation of the present crisis so as to reflect its essential moral and economic origins.
2. The redefinition of the state’s functions so as to distinguish more clearly between the totalitarian and the liberal order.
3. Methods of reestablishing the rule of law and of assuring its development so that individuals and groups are not in a position to encroach upon the freedom of others and private rights are not allowed to become a basis of predatory power.
4. The possibility of establishing minimum standards by means not inimical to initiative and the functioning of the market.5. Methods of combating the misuse of history for the furtherance of creeds hostile to liberty.6. The problem of creating an international order conducive to the safeguarding of peace and liberty and permitting the establishment of harmonious international economic relations. (pp. 159-60)
Conservative economists consciously construed the core elements of their economic theories in moral and political terms, and insisted they be treated as articles of faith:
America’s hidden philosophy/ John McCumber
Rational choice theory, originally developed at the RAND Corporation in the late 1940s... holds that people make (or should make) choices rationally by ranking the alternatives presented to them with regard to the mathematical properties of transitivity and completeness. They then choose the alternative that maximises their utility, advancing their relevant goals at minimal cost. Each individual is solely responsible for her preferences and goals, so rational choice theory takes a strongly individualistic view of human life. The ‘iron laws of history’ have no place here, and large-scale historical forces, such as social classes and revolutions, do not really exist except as shorthand for lots of people making up their minds. To patriotic US intellectuals, rational choice theory thus held great promise as a weapon in the Cold War of ideas.
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Cold War philosophy also continues to structure US society at large… Cold War philosophy also influences US society through its ethics. Its main ethical implication is somewhat hidden, because Cold War philosophy inherits from rational choice theory a proclamation of ethical neutrality: a person’s preferences and goals are not subjected to moral evaluation. As far as rational choice theory is concerned, it doesn’t matter if I want to end world hunger, pass the bar, or buy myself a nice private jet; I make my choices the same way. Similarly for Cold War philosophy – but it also has an ethical imperative that concerns not ends but means. However laudable or nefarious my goals might be, I will be better able to achieve them if I have two things: wealth and power. We therefore derive an ‘ethical’ imperative: whatever else you want to do, increase your wealth and power!
Like all cults, conservative economics has tenets of faith, the dogma that cannot be challenged, even when all empirical evidence contradicts the tents of faith:
Authoritarian Neoliberalism and the myth of free markets/ Ian Bruff
Far from being defeated by the eruption of global crisis in 2008, neoliberalism has in some respects become even more firmly entrenched, and in a more intensely and more explicitly anti-democratic form as well. In addition to the above, we have witnessed, across the world, a sustained attempt to erode formal rights in the name of “good capitalism.”
Once the threat of imminent global collapse had receded by the end of 2008, neoliberal intellectuals and proselytizers quickly moved to relocate responsibility for the crisis away from financial institutions, meaning that the key challenge was not to reform capitalism, or even finance, but states. The inability to regulate appropriately either consumers or financial institutions resulted in the “immoralization” of finance and consequently states’ own budget deficits because of the bailouts of the banks.
Hence, states were declared guilty of permitting the massive excesses in the finance sector, meaning that the only way to prevent this from happening again was to impose self-binding constraints on states in the name of economic “necessity.” Since 2008, a whole raft of constitutional and legal changes has been introduced, explicitly seeking to subordinate the state to rules and procedures that constitutionalize austerity and normalize the ongoing degradation of public provision as a “neutral” objective. The best-known examples can be found in the European Union, where the rush to self-flagellate has led to the imposition of drastic forms of restructuring, especially on Greece — all in the name of the European social model. But it is a common theme across the world.
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Neoliberalism has always been about the reconceptualization and not the amputation of the state, according it a central role in producing the kind of society that neoliberals wish to see. However, it is less possible nowadays to mask this with the empty words “free” and “markets,” meaning that as the state becomes seemingly stronger and more authoritarian, it simultaneously evolves into a more fragile and delegitimized entity.
At the core of cult of conservative economics is its founding myth: the market itself as an independent entity, with its ‘invisible hand’:
The Market Myth/ Tomas Bjorkman
The word myth has two meanings:
- A widely held but false belief or idea.
- A traditional story — a narrative — especially one concerning the early history of a people or one explaining natural or social phenomenon, typically involving supernatural beings or events.
The market fulfils both of these meanings. First, it is a myth that the market produces fairness or that it maximises the common good. We will come across a number of other myths of this kind, things most experts know are wrong but that we somehow keep on believing as our “folk-knowledge” about the markets. Second, the market is also the “big story” — the meta-narrative — of our time: it’s the story that explains the foundations of our new global world. It even involves supernatural forces like the so-called ‘invisible hand’.
The first meaning of myth is the obvious one. We dismiss stories as myths all the time. In the next chapter we will be looking at what I consider to be the seven most dangerous myths — false beliefs — that we commonly hold about the market today, and why they are so dangerous.
The second meaning is even more interesting. This is the meaning, for example, of the myth of the creation of the world or the Tower of Babel. When we say these are myths, we are not necessarily dismissing them as false. We are saying they are not necessarily true in the narrow sense that the Battle of Hastings is an historical fact. We are saying that they are important stories that help us make sense of the world, of life and of our human predicament. Human beings need meaning and the myths we construct about life help us to put a frame around a reality that would otherwise seem chaotic.
In this way, the market is the overarching modern myth that props up our society and explains evils and injustice. It gives direction to our lives, and — as we currently understand it — it narrows down the purpose of life to making money and being a consumer. In a sense, the market is our new religion and the economists our new priests. Just like religions in the past, we have to understand that there are powerful interests that support the myth and the current functioning of society. Those who stand out and question the underlying mythology are ignored, dismissed or scolded as heretics. In another age, they might have been burned as such. (emphasis added)
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The unwavering faith in the principles of neoliberal economics (the dogma) has more in common with what we now might see as obvious superstition than is apparent at first glance.
The deep associations between ‘modern economic theory’, and astrology, can be traced over two thousand years, and astrology is found to have played an integral role in the thinking of economists, who share with ancient astrologers the use of mathematics as mystical totems, since the time of early Chinese emperors:
The new astrology: By fetishising mathematical models, economists turned economics into a highly paid pseudoscience/ Alan Jay Levinovitz
Just as astrology and mathematics were once synonymous in the West, the Chinese spoke of li, the science of calendrics, which early dictionaries also glossed as ‘calculation’, ‘numbers’ and ‘order’. Li models, like macroeconomic theories, were considered essential to good governance. In the classic Book of Documents, the legendary sage king Yao transfers the throne to his successor with mention of a single duty: ‘Yao said: “Oh thou, Shun! The li numbers of heaven rest in thy person.”’
Levinovitz traces how astrology, which relied on arcane, often quite sophisticated, mathematics, created a faith built on numbers, and this scripture of mathematics has been carried forward to the modern filed of economics:
As an extreme example, take the extraordinary success of Evangeline Adams, a turn-of-the-20th-century astrologer whose clients included the president of Prudential Insurance, two presidents of the New York Stock Exchange, the steel magnate Charles M Schwab, and the banker J P Morgan. To understand why titans of finance would consult Adams about the market, it is essential to recall that astrology used to be a technical discipline, requiring reams of astronomical data and mastery of specialised mathematical formulas. ‘An astrologer’ is, in fact, the Oxford English Dictionary’s second definition of ‘mathematician’. For centuries, mapping stars was the job of mathematicians, a job motivated and funded by the widespread belief that star-maps were good guides to earthly affairs. The best astrology required the best astronomy, and the best astronomy was done by mathematicians – exactly the kind of person whose authority might appeal to bankers and financiers.
In fact, when Adams was arrested in 1914 for violating a New York law against astrology, it was mathematics that eventually exonerated her. During the trial, her lawyer Clark L Jordan emphasised mathematics in order to distinguish his client’s practice from superstition, calling astrology ‘a mathematical or exact science’…
The historian Caley Horan at the Massachusetts Institute of Technology described to me how computing technology made financial astrology explode in the 1970s and ’80s. ‘Within the world of finance, there’s always a superstitious, quasi-spiritual trend to find meaning in markets,’ said Horan. ‘Technical analysts at big banks, they’re trying to find patterns in past market behaviour, so it’s not a leap for them to go to astrology.’ In 2000, USA Today quoted Robin Griffiths, the chief technical analyst at HSBC, the world’s third largest bank, saying that ‘most astrology stuff doesn’t check out, but some of it does’.
As I noted in a prior diary, there is a deeply embedded and longstanding connection between conservatism, Christian fundamentalism, and idolization of the free market and the accumulation of wealth:
Prosperity Gospel, Fundamentalism and Trump voters: sickness in the conservative soul. (Jan. 20, 2017)
The swarming of conservatives— especially fundamentalists— to Mr. Trump is no mystery. He is the embodiment of a worldview, and aspirations, that are at the true core of their identity.
That is, it is natural for members of the cult of the market to imbue the pursuit of American oligarchy with religious significance, and see their efforts to maintain it as a sort of religious devotion (even if they are prioritizing opposing socialism, rather than,a la Mike Pence, establishing a theocracy, but of course part of the hostility to progressivism is its association with socialism and Marxism, and therefore with atheism). And at the core of the free-market myth is the idea the government is the enemy of freedom, and must be weakened, not strengthened to ensure the rights of all.
This is why the dismantling of the the functions of the government, and abandonment of its basic institutions, evoke either silence or active complicity from the majority of the GOP Congress, and, as of this month, most GOP voters:
Eighty-eight percent said they would vote for Trump again, a slight improvement over the May figure of 82 percent. Taken together, the polls suggest that Trump’s standing with his base has improved slightly over the past few months despite his Republican Party’s repeated failures to overhaul the healthcare system and multiple congressional and federal investigations into his campaign’s ties to Russia.
They are not troubled by ‘disrupting government’— they celebrate it.
The defense of the free-market myth is more than self-interest for oligarchs: it is a holy war against apostates and heretics to the faith— progressives.