How neoliberals stitched up wealth of nations for themselves
Source Peter Hollings
Date 07/08/31/08:56

How the neoliberals stitched up the wealth of nations for themselves

A cabal of intellectuals and elitists hijacked the economic debate, and
now we are dealing with the catastrophic effects

George Monbiot
Tuesday August 28, 2007
The Guardian

FOR THE FIRST time the UK's consumer debt exceeds the total of its gross
national product: a new report shows that we owe 1.35 trillion.
Inspectors in the United States have discovered that 77,000 road bridges
are in the same perilous state as the one which collapsed into the
Mississippi. Two years after Hurricane Katrina struck, 120,000 people
from New Orleans are still living in trailer homes and temporary
lodgings. As runaway climate change approaches, governments refuse to
take the necessary action. Booming inequality threatens to create the
most divided societies the world has seen since before the first world
war. Now a financial crisis caused by unregulated lending could turf
hundreds of thousands out of their homes and trigger a cascade of
economic troubles.
These problems appear unrelated, but they all have something in common.
They arise in large part from a meeting that took place 60 years ago in
a Swiss spa resort. It laid the foundations for a philosophy of
government that is responsible for many, perhaps most, of our
contemporary crises.
When the Mont Pelerin Society first met, in 1947, its political project
did not have a name. But it knew where it was going. The society's
founder, Friedrich von Hayek, remarked that the battle for ideas would
take at least a generation to win, but he knew that his intellectual
army would attract powerful backers. Its philosophy, which later came to
be known as neoliberalism, accorded with the interests of the
ultra-rich, so the ultra-rich would pay for it.
Neoliberalism claims that we are best served by maximum market freedom
and minimum intervention by the state. The role of government should be
confined to creating and defending markets, protecting private property
and defending the realm. All other functions are better discharged by
private enterprise, which will be prompted by the profit motive to
supply essential services. By this means, enterprise is liberated,
rational decisions are made and citizens are freed from the dehumanising
hand of the state.
This, at any rate, is the theory. But as David Harvey proposes in his
book A Brief History of Neoliberalism, wherever the neoliberal programme
has been implemented, it has caused a massive shift of wealth not just
to the top 1%, but to the top tenth of the top 1%. In the US, for
instance, the upper 0.1% has already regained the position it held at
the beginning of the 1920s. The conditions that neoliberalism demands in
order to free human beings from the slavery of the state - minimal
taxes, the dismantling of public services and social security,
deregulation, the breaking of the unions - just happen to be the
conditions required to make the elite even richer, while leaving
everyone else to sink or swim. In practice the philosophy developed at
Mont Pelerin is little but an elaborate disguise for a wealth grab.
So the question is this: given that the crises I have listed are
predictable effects of the dismantling of public services and the
deregulation of business and financial markets, given that it damages
the interests of nearly everyone, how has neoliberalism come to dominate
public life?
Richard Nixon was once forced to concede that "we are all Keynesians
now". Even the Republicans supported the interventionist doctrines of
John Maynard Keynes. But we are all neoliberals now. Margaret Thatcher
kept telling us that "there is no alternative", and by implementing her
programmes Clinton, Blair, Brown and the other leaders of what were once
progressive parties appear to prove her right.
The first great advantage the neoliberals possessed was an unceasing
fountain of money. US oligarchs and their foundations - Coors, Olin,
Scaife, Pew and others - have poured hundreds of millions into setting
up thinktanks, founding business schools and transforming university
economics departments into bastions of almost totalitarian neoliberal
thinking. The Heritage Foundation, the Hoover Institute, the American
Enterprise Institute and many others in the US, the Institute of
Economic Affairs, the Centre for Policy Studies and the Adam Smith
Institute in the UK, were all established to promote this project. Their
purpose was to develop the ideas and the language which would mask the
real intent of the programme - the restoration of the power of the elite
- and package it as a proposal for the betterment of humankind.
Their project was assisted by ideas which arose in a very different
quarter. The revolutionary movements of 1968 also sought greater
individual liberties, and many of the soixante-huitards saw the state as
their oppressor. As Harvey shows, the neoliberals coopted their language
and ideas. Some of the anarchists I know still voice notions almost
identical to those of the neoliberals: the intent is different, but the
consequences very similar.
Hayek's disciples were also able to make use of economic crises. An
early experiment took place in New York City, which was hit by budgetary
disaster in 1975. Its bankers demanded that the city follow their
prescriptions - huge cuts in public services, smashing of the unions,
public subsidies for business. In the UK, stagflation, strikes and
budgetary breakdown allowed Thatcher, whose ideas were framed by her
neoliberal adviser Keith Joseph, to come to the rescue. Her programme
worked, but created a new set of crises.
If these opportunities were insufficient, the neoliberals and their
backers would use bribery or force. In the US, the Democrats were
neutered by new laws on campaign finance. To compete successfully for
funding with the Republicans, they would have to give big business what
it wanted. The first neoliberal programme of all was implemented in
Chile following Pinochet's coup, with the backing of the US government
and economists taught by Milton Friedman, one of the founding members of
the Mont Pelerin Society. Drumming up support for the project was easy:
if you disagreed, you got shot. The International Monetary Fund and the
World Bank used their power over developing nations to demand the same
But the most powerful promoter of this programme was the media. Most of
it is owned by multimillionaires who use it to project the ideas that
support their interests. Those ideas which threaten their interests are
either ignored or ridiculed. It is through the newspapers and TV
channels that the socially destructive notions of a small group of
extremists have come to look like common sense. The corporations' tame
thinkers sell the project by reframing our political language (for an
account of how this happens, see George Lakoff's book, Don't Think of an
Elephant!). Nowadays I hear even my progressive friends using terms like
wealth creators, tax relief, big government, consumer democracy, red
tape, compensation culture, job seekers and benefit cheats. These terms,
all invented or promoted by neoliberals, have become so commonplace that
they now seem almost neutral.
Neoliberalism, if unchecked, will catalyse crisis after crisis, all of
which can be solved only by greater intervention on the part of the
state. In confronting it, we must recognise that we will never be able
to mobilise the resources its exponents have been given. But as the
disasters they have caused unfold, the public will need ever less
persuading that it has been misled.

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