Читать книгу Never Let A Serious Crisis Go to Waste - Philip Mirowski - Страница 8

2

Shock Block Doctrine:

Neoliberalism as Thought Collective and Political Program

There are many ways that social theory operates in a modality different from the natural sciences; but one standout characteristic is that when it comes to the Big Notions that really matter, the social disciplines often find their acolytes proclaiming the “Death of X” contemporaneously with commensurate authorities insisting that X never really existed. In physics, for instance, analysts might want to claim that Ptolemaic astronomy or aether theory or cold fusion was “dead” for the modern profession, but never go so far as to assert that the theory or concept had historically just been a figment of the imaginations of people who should never have been taken seriously all along. By contrast, this happens all the time in social thought: social theorists often attempt the torturous straddle of denying that some widespread concept ever really existed, while pronouncing last rites over the ectoplasmic corpse. No wonder we have become ensnared in zombie nightmares, as glimpsed in the last chapter. It may be symptomatic of an endemic wobbly sense of ontology, or perhaps a deficiency in sense of decorum for the dear departed, or maybe something worse, but it nonetheless is an occupational hazard that renders debate treacherous.

The theoretical entity “neoliberalism” has suffered this straddle over the unfolding of the current crisis. A chorus of think tanks trumpeted its negligibility, while a smaller choir chanted its dirge. All manner of commentators, including, significantly, no small number of neoliberals, have insisted that the theory behind the label never really existed;¹ if they happen to be preternaturally pugnacious, they tend to dismiss it as a swearword emitted by addled denizens of the left. The confusion was then confounded by an outbreak of premature rumors of the Demise of Neoliberalism, when people were suggesting that the economic crisis had finally sealed its fate. The impression back then was so vivid for some that they could practically hear the worms feasting on the carcass of the still-warm ideology. The purpose of chapter 1 was to suggest that a few subsequent years’ experience has vexed and discomfited almost everyone involved, and that political progress demands that this calamity be better understood. It may be the case that even those who feel they have a good working knowledge of political theory need to revisit the entire question of neoliberalism, if only to better focus upon the incongruity of the neoliberals coming out of the crisis stronger than when they were paving the way for its onset. It is one thing to glibly appeal to a nefarious “Shock Doctrine” (see Naomi Klein), it is another to comprehend in detail how the reckoning was evaded: something here dubbed the “Shock Block Doctrine.” Neoliberalism is alive and well; those on the receiving end need to know why.

Questions as to its existence, its efficacy, and its vulnerability to refutation lie at the heart of the concerns that motivate this chapter. Neoliberal initiatives and policies still carry the day, and more to the point, most people still understand their own straitened circumstances through the lens of what can only be regarded as neoliberal presumptions. Can it be chalked up to confusion, or sour grapes, or a gullible temperament? Was it due to the intersection of some otherwise uncorrelated historical tendencies, like the provocation of immigrant labor, the weaknesses of the governmental structures of the European Union, or heavy state dependence on the financial sector? In writing the history, many local conjunctures must be acknowledged, but none of them really get at the Intellectual Teflon: the way the crisis did not provoke any fundamental revision of prior political catechism.² The most likely reason the doctrine that precipitated the crisis has evaded responsibility and the renunciation indefinitely postponed is that neoliberalism as worldview has sunk its roots deep into everyday life, almost to the point of passing as the “ideology of no ideology.”

Indeed, at this late hour, the world is still full of people who believe that neoliberalism doesn’t really exist. I run into them every day. Mitchell Dean nicely captures this attitude: “Neoliberalism, it might be argued, is a rather overblown notion, which has been used, usually by a certain kind of critic, to characterize everything from a particular brand of free-market political philosophy to a wide variety of innovations in public management.”³ For such skeptics, it is inconceivable to them that contemporary political economy displays any kind of structure, outside of some vague notions of supply and demand. Most people, it seems, have never even heard of the Mont Pèlerin Society, which at one time in its history was the premier site of the construction of neoliberalism. Liberalism, neoliberalism, conservatism, libertarianism . . . at least in America, they are all just a blur. People who live elsewhere in the world have little feeling for the American cultural drumbeat that keeps insisting politics has no theoretical grounding—it is only something dubbed “human nature” that can be theorized. America, that fabled Land of Neoliberalism in European parlance, soldiers on, blissfully unaware that it is neoliberal. One temptation might be to attribute this to some notorious Anglophone allergy to abstract political analysis; but that would be too hasty. Part of the blame might be laid at the door of the neoliberals themselves: as I document below, even though the members of Mont Pèlerin Society initially used the term “neoliberal” to refer to themselves in the early 1950s, by the 1960s they had backtracked, trumpeting the ambagious notion that their ideas all could be traced back to Adam Smith, if not before. But an equal moiety of blame should be dished out to their opponents on the left, who often bandy about attributions of “neoliberalism” as a portmanteau term of abuse when discussing grand phenomena often lumped together under the terminology of “globalization” and “financialization” and “governmentality.” The Washington Consensus, the death of the welfare state, the risk society, the wars in Iraq and Afghanistan, European (dis)integration, the ascendancy of China, and the outsourcing of manufacturing all portend cosmic themes, mostly of interest to those who regard themselves of taking the broad view of power politics.⁴ But broad characterizations of contemporary political events should not be mistaken for the painstaking construction of political doctrines to motivate organization in the long run, however much they may be related. Abstract dreadnoughts battling in the hyperspace of concepts, as with nationalisms clashing in the dead of night, have done little to illuminate the nature of neoliberalism for the average person, alas. And then there are those who insist it is really all about “economic theory,” which is guaranteed to make most people want to pass it by as quickly as possible.

The clarification of the neoliberal program is first and foremost a historical inquiry: much of the preliminary spadework unearthing its lineage and development has already been performed. We shall have occasion to reference this body of work over the rest of this volume.⁵ But rather than simply recapitulating that historical narrative here, this chapter will approach the role of neoliberalism in the crisis in a more analytical register: first by documenting the ways that it was anticipated that the crisis would purportedly change the intellectual landscape; then by summarizing commonplace misconceptions about the core doctrines of neoliberalism which serve to reinforce its longevity; following that up with the indispensable characterization of the “double truth” of neoliberalism; and ending up with one of the major reasons neoliberals have come through the crisis unscathed, as rooted in their approach to knowledge itself. Fortified with this understanding of the political background, we can then turn directly to issues of the conceptual unfolding of the crisis itself in the rest of the volume.

Don’t Look Back

There can be no joy in pointing out just how wrong people have been about the intellectual consequences of the crisis. I recall myself entertaining the notion back in 2008 that perhaps, finally, we just might dispense with some of the rubbish that had sullied a political economy orthodoxy over my lifetime. Apophenia cascades at epidemic proportions when the sky seems to be falling.

In August 2007, the Guardian columnist George Monbiot wrote, “We are all neoliberals now.”⁶ Now, five years later, Monbiot’s claim must seem eerily prescient. Things were not always thus. In the midst of the downdraft of 2008–9, I remember people saying to me: Yes, it’s been awful, but maybe the trial by fire will cleanse as well as sear. As Jenny Turner reminisced in the London Review of Books, “People imagined that a crash, when it came, would act like Occam’s Razor, cutting out the hedge funds and leaving the world a little saner . . .” Who among us back then did not suspect that the collapse of Bear Stearns, Lehman Brothers, AIG, Northern Rock, Lloyd’s Bank, Anglo Irish Bank, ­Kaupthing, Landsbanki, Glitnir (and a parade of lesser institutions) would at least cut through the smarmy triumphalism of those who claimed to fully comprehend the workings of the globalized economy? Such a simultaneous worldwide collapse, first of finance, then of the rest of economic activity, had up till then been the hallmark of conspiracy theorists, apocalypse mongers, and some unreconstructed historical materialists. As the world witnessed the meltdown in dazed disbelief, it was not so outlandish to imagine that epochal events so seared into everyone’s consciousness could not help but prompt them to reevaluate their previous beliefs. How could anyone deny something had gone badly awry? The next step in the syllogism, but the link fated to fail, was that everyone would perceive that the prior bubble was the direct consequence of certain modes of thought, and thus, it was these doctrines that would be refuted. Collect those doctrines together under the umbrella term “neoliberalism,” toss into the mix a Little Bo Peep falsificationist psychology, and there materialized the widespread perception that we were living through the demise of an entire way of thinking:

The first intellectual consequence of the economic crisis was to undermine Neoliberalism—or the belief in the sufficiency of markets to secure human welfare—as the age’s default ideology.⁷

The free market project is on the ropes. Never before has the question of neoliberalism’s political, economic and social role—culpability might be a better word—been debated with such urgency, so globally, in such a public manner.⁸

Neoliberalism has self-destructed. The thirty year long global march of free market ideology has come to an end.⁹

Today there has been a partial awakening . . . A striking number of free market economists, worshippers at the feet of Milton Friedman and his Chicago colleagues, have lined up to don sackcloth and ashes and swear allegiance to the memory of John Maynard Keynes.¹⁰

The crisis revealed the strategy’s unsustainable character, leading to what can be denoted as the “crisis of neoliberalism” . . . No distinction is made between hegemony and domination as in approaches of Gramscian inspiration.¹¹

The promises of neoliberalism are revealed for what they were: a sham. An ideology that seduced most of the population is broken. The psychic and political consequences are incalculable.¹²

The fall of Wall Street is to neo-liberalism what the fall of the Berlin Wall was to communism.¹³

This naturalization of market logic (or “values,” to use Massimo de Angelis’s language) was nothing more than a spell. This spell was broken in 2008, a year after The Beginning of History was published. The point of all this: When I argue that we now live in a postneoliberal world, I do not mean that its practices or program have ceased (Ireland, Greece, and Portugal make it loud and clear that it’s alive and kicking), but that the narrative of the market’s universality is no longer unchallenged. The market is not the one and all; it has an outside, it has a limit.¹⁴

Just so it doesn’t appear that I am unfairly taking advantage of a certain class of people who might have been overly inclined to jump the gun, let’s sample some people closer to the orthodoxy in American economics like, say, Joseph Stiglitz:

Neo-liberal market fundamentalism was always a political doctrine serving certain interests. It was never supported by economic theory. Nor, it should now be clear, is it supported by historical experience. Learning this lesson may be the silver lining in the cloud now hanging over the global economy.¹⁵

In an interview with the Berliner Zeitung, Stiglitz was quoted as saying, “Neoliberalism like the Washington Consensus is dead in most western countries. See the debates in South America or other countries. The U.S. has lost its role as the model for others. Everyone only laughs when U.S. technocrats give lectures in other countries and say: ‘Do as we do, liberalize your financial markets!’”¹⁶ Stiglitz, as one of the few neoclassical economists who has periodically attempted to intellectually refute neoliberalism over the course of his career, should therefore be regarded as someone who had significant credibility tied up in expressing his conviction that the demise of neoliberalism was at hand.

Or, alternatively, suppose we consult an eminent proponent of globalization analysis, Saskia Sassen, prognosticating “The End of Financial Capitalism”: “The difference of the current crisis is precisely that financialized capitalism has reached the limits of its own logic.”¹⁷ David Harvey more tentatively and cautiously asked whether it was “really” the end of neoliberalism.¹⁸ Some members of the faculty at Cambridge and Birkbeck declared, “The collapse of confidence in financial markets and the banking system . . . is currently discrediting the conventional wisdom of neo-liberalism.”¹⁹ Various politicians temporarily indulged in the same hyperbole: Prime Minister Kevin Rudd of Australia openly proclaimed the death of neoliberalism, only to succumb to his own untimely political demise at the hands of his own party; Senator Bernie Sanders prognosticated that as Wall Street collapsed, so too would the legacy of Milton Friedman. Yet, unbowed, the University of Chicago solicited $200 million in donations to erect a monument in his honor, and founded a new “Milton Friedman Institute.”²⁰ “Wakes for Neoliberalism” were posted all about the Internet in 2008–9; a short stint on Google will provide all the Finnegan that is needed.

More elaborate analyses of the unfolding of the crisis by academics on the left followed suit. John Campbell, for one, has argued that the financial meltdown was itself a manifestation of the crisis of neoliberalism, in that defective understanding of markets led to the loosening of financial regulation and other trickle-up government policies—that ideas were just as important as the inertia inherent in institutions.²¹ Of course, Campbell tempers the analysis with the warning, “Despite theoretical arguments about the moment of crisis triggering radical change, many scholars now recognize that institutional change tends to be much more incremental even at historical junctures like this one.” Others were a bit less cautious. Yet, whether circumspect or perfervid, each crisis diagnostic held fast to the syllogism that people can learn from their mistakes; the deep contraction and financial breakdown stands as irrefutable evidence that neoliberalism is false; and therefore, neoliberalism must be on its last legs. That credo was the fuel of the machine that churned out reams of crisis commentary from 2008–10; it put the hi-fi in early litanies of financial reform. One encounters this admonitory approach to the death of neoliberalism in the most diverse accounts of the crisis.²² It could even be found in authors who would not themselves otherwise be caught dead using the term “neoliberalism” in elevated company.

While it would be a digression to plunge into the bramble thickets of formal epistemology in a book about the crisis, there was at least one major flaw in all these prognostications that needs to be taken into account here. Social psychology, the history and philosophy of science, and the sociology of knowledge all combine to instruct us that people don’t generally behave like that. Only the most ersatz Popperian believer in the awesome power of local falsificationism would begin to presume that some finite observation would immediately impel people to cast their most cherished beliefs into doubt and reconsider long-held ideas that anchor much of their worldview. Such conversions have been known to happen, but they have been few and far between. Predominantly, the long history of schooling, socialization, and past experience induces a stubborn inertia into cognitive processes. More commonly, people react to potential disconfirmation of strongly held views by adjusting their own understandings of the doctrine in question to accommodate the contrary evidence; this has been discussed in the social psychology literature under the rubric of “cognitive dissonance,” and in the philosophy literature as Duhem’s Thesis. Cognition sports an inescapable social dimension as well: people cannot vet and validate even a small proportion of the knowledge to which they subscribe, and so must of necessity depend heavily upon others such as teachers and experts and peers to underwrite much of their beliefs.²³ And then there is a second major consideration relevant to our current conundrum, namely, the issue of whether most people who may subscribe to something like neoliberalism actually understand it to be constituted as a coherent doctrine with a spelled-out roster of propositions, or instead treat their notions as disparate implications of other beliefs. As we have already intimated, many people still have no clue what neoliberalism is, much less harbor opinions about how their own thought processes might relate to it. In other words, how could they come to reject something which for them putatively lacks spatio-temporal solidity, or at minimum, must they themselves consciously understand their beliefs as part of a coherent intellectual tradition?

This volume is dedicated to exploring the ways in which the crisis has not yet served as an exemplary instance of falsification of much of anything; it explores various defense mechanisms of critical groups such as orthodox economists and members of the Neoliberal Thought Collective; the intention is to clear a path to some potential remedy to that situation. However, in order to reach that point, it is first necessary to become better acclimatized to the notion that a burst of bad news does not generally bring a dogma crashing down of its own accord. It takes a whole lot more than that; and thus a preliminary admonition of epistemic caution is the touchstone of the current chapter. The rest of this section is devoted to a quick sketch of the sobering lessons of social psychology for the premature expectations of the demise of neoliberalism; whereas the next section is devoted to the difficult question of whether neoliberalism could or should be considered a tolerably coherent phenomenon that has exhibited sufficient integrity over past decades for any refutation to have something to stick to.

What happens when a seductive synoptic ideology suffers “breakage,” as our commentators have it? It would be odd if this had not been a major topic of exploration, since it speaks so directly to our images of ourselves and others. While there have been many modes and idioms in which the question has been broached, for the sake of brevity we shall describe but one: the attempt to comprehend these responses as a case study in the social psychological problem of cognitive dissonance. The father of “cognitive dissonance theory” was the social psychologist Leon Festinger. In his premier work on the subject, he addressed the canonical problem situation which captures the predicament of the contemporary economics profession:

Suppose an individual believes something with his whole heart . . . suppose that he is then presented with unequivocal and undeniable evidence that his belief is wrong: what will happen? The individual will frequently emerge, not only unshaken, but even more convinced of the truth of his beliefs than ever before. Indeed, he may even show a new fervor about convincing and converting people.²⁴

This profound insight, that confrontation with contrary evidence may actually augment and sharpen the conviction and enthusiasm of a true believer, was explained as a response to the cognitive dissonance evoked by a disconfirmation of strongly held beliefs. The thesis that humans are more rationalizing than rational has spawned a huge literature, but one that gets little respect in economics.²⁵ Cognitive dissonance and the responses it provokes venture well beyond the literature in the philosophy of science that travels under the rubric of Duhem’s Thesis, in that the former plumbs response mechanisms to emotional chagrin, whereas the latter sketches the myriad ways in which auxiliary hypotheses may be evoked in order to blunt the threat of disconfirmation. Duhem’s Thesis states that there are an infinite number of auxiliary hypotheses that may be invoked to explain why an empirical event did not actually impugn the target doctrine at risk: instead, uncontrolled factors intervened. Philosophy of science revels the ways in which it may be rational to discount contrary evidence; but the social psychology of cognitive dissonance reveals just how elastic the concept of rationality can be in social life.

Leon Festinger and his colleagues illustrated these lessons in his first book (When Prophecy Fails) by reporting the vicissitudes of a group of Midwesterners they called “The Seekers,” who conceived and developed a belief that they would be rescued by flying saucers on a specific date in 1954, prior to a great flood coming to engulf Lake City (a pseudonym). Festinger documents in great detail the hour-by-hour reactions of the Seekers as the date of their rescue came and passed with no spaceships arriving and no flood welling up to swallow Lake City. At first, the Seekers withdrew from representatives of the press seeking to upbraid them for their failed prophecies, but soon reversed their stance, welcoming all opportunities to expound and elaborate upon their (revised and expanded) faith. A minority of their group did fall away; but Festinger notes they had tended to be lukewarm peripheral members of the group before the crisis. Predominantly, the Seekers never renounced their challenged doctrines, as reported by Festinger. At least in the short run, the ringleaders tended to redouble their proselytizing, so long as they were able to maintain interaction with a coterie of fellow covenanters.

In a manner of speaking, the legacy of renunciation of philosophy and methodology in graduate education led much of the orthodox economics profession, and many of the denizens of the neoliberal world of think tanks and media outlets, to behave from 2008 onward in ways rather similar to the Seekers. The parallels between the Seekers and the contemporary economics profession, on the one hand, and the Neoliberal Thought Collective, on the other, are, of course, not exact. The Seekers were disappointed when their world didn’t come to an end; economists and neoliberals were convinced their Great Moderation and neoliberal triumph would last forever, and were disappointed when it did appear to come to an end. The stipulated turning point never arrived for the Seekers, while the unsuspected turning point got the drop on the economists. The Seekers garnered no external support for their doctrines, indeed, quitting their jobs and contracts prior to their fated day; the economists, and more clearly, the Neoliberal Thought Collective, persisted in being richly rewarded by many constituencies for remaining stalwart in their beliefs. The public press was never friendly toward the Seekers; it turned on the economists only with the financial collapse. (There are now plentiful signs it has been reverting to its older slavish adoration, however.) But nonetheless, the shape of the reactions to cognitive dissonance turned out to be amazingly similar. The crisis, which at first blush might seem to have refuted almost everything that the NTC and the economic orthodoxy stood for, was in the fullness of time more often than not trumpeted from both the left and the right as reinforcing their adherence to, respectively, neoclassical economic theory or the neoliberal tradition.

In the last few years, there may have opened up a divergence between the explicit behavior of professional economists and that of other groups who may have displayed some allegiance to neoliberal doctrines. This distinction, insisted upon in chapter 1, now begins to bite. The difference comes with the economists readily accepting that they do share some common doctrines and intellectual orientations. Their PhD from a ranked institution does double duty as a membership card; few of them spend any time doubting whether “economics” as a body of doctrine exists. Thus it will prove relatively straight­forward to demonstrate that they have not revised their erstwhile doctrines dating from before the crisis. But the denizens of the think tank planisphere and journalists and political actors in these contentious times may not subscribe so intently or openly to a fixed, discrete set of doctrines in quite the same unself-conscious manner. (Indeed, ­chapter 6 will propose a stratified spectrum of crisis response under neoliberalism.) Consequently, demonstration of the fundamental premise of cognitive dissonance theory—that people don’t shift allegiances in the throes of contravening evidence—will require more elaborate documentation for the neoliberals. Once again, the imperative to treat both groups separately will prove clarifying.

Does Neoliberalism Really Exist?

The really fascinating battles in intellectual history tend to occur when some group or movement goes on the offensive and asserts that Something Big really doesn’t actually exist. A short list of blasts from the past would include: the earth-centered universe, God, the Philosopher’s Stone, atoms, the vacuum, the divine right of kings, perpetual motion machines, evolution, a formally complete axiomatic system, aether, global warming, society, and human consciousness. As chapter 1 noted, we have just passed through a period when a substantial cadre were insisting that orthodox neoclassical economics didn’t exist. Nothing gets the blood roiling like the assertion that we have been arguing over nothing. Whatever the eventual outcome, these negations are the flash points that tend to force thought out of its complacent ruts and tend to mark periods of lush proliferation of theoretical and empirical innovation. I would like to explore the possibility that we might approach the concept “neoliberalism” with the same appreciation. In order to accomplish this, a certain modicum of intellectual history is indispensable.

We elect to start with the manifest phenomenon that most people whom outsiders would identify as neoliberals would reject the label outright, and indeed, deny the position exists as a coherent doctrine. For them, it is just another swearword bandied about by their opponents, rather like “fascism” or “equality.” Some go further, adopting the nominalist position that if “we” refuse to call ourselves neoliberal, then no one else has the right to do so, either. More recently, one can find certain authors on the left advocating that the doctrine is so ephemeral and diffuse that it displays insufficient quiddity for analysis.

The nominalist position can be rapidly dispensed with. As my collaborators and I have insisted elsewhere, the people associated with the doctrine did call themselves “neo-liberals” for a brief period lasting from the 1930s to the early 1950s, but then they abruptly stopped the practice.²⁶ In the early phases, various figures such as Alexander Rüstow vied for bragging rights in coining the term.²⁷ Others simply acknowledged its currency. To give one pertinent example from many, Milton Friedman wrote in the Norwegian journal Farmand in 1951:

A new ideology . . . must give high priority to real and efficient limitation of the state’s ability to, in detail, intervene in the activities of the individual. At the same time, it is absolutely clear that there are positive functions allotted the state. The doctrine that, on and off, has been called neoliberalism and that has developed, more or less simultaneously in many parts of the world . . . is precisely such a doctrine . . . But instead of the 19th century understanding that laissez-faire is the means to achieve this goal, neoliberalism proposes that competition will lead the way.²⁸

Friedman was still flirting with something like the label as late as 1961, in an early draft of what later became Capitalism and Freedom:

This use of the term liberalism in these two quite different senses renders it difficult to have a convenient label for the principles I shall be talking about. I shall resolve these difficulties by using the word liberalism in its original sense. Liberalism of what I have called the 20th century variety has by now become orthodox and indeed reactionary. Consequently, the views I shall present might equally be entitled, under current conditions, the “new liberalism,” a more attractive designation than “nineteenth century liberalism.”

In another historical phenomenon that I feel has not received sufficient attention, soon after many of the neoliberals renounced the label, opponents to their right began to resort to it in order to be provocative. Murray Rothbard, from a more libertarian perspective, began to excoriate Friedman for his position. Later classical liberals, dissatisfied specifically with the evolution of the Mont Pèlerin Society, would resort to the term to contrast the position of Ludwig von Mises with what they considered the debased version found in Friedrich Hayek and elsewhere.²⁹ The question of why the target group in and around Mont Pèlerin invoked a self-denying ordinance in using the label is interesting in its own right, and we will return to it in the next section. But for the nonce, I trust everyone can accept that the nominalist position is flawed: the term was and sometimes still is used in a sensible way on both the left and right, and moreover, the roster of people and institutions referenced is fairly stable over time: members of the Mont Pèlerin Society and their close associates. To a first approximation, the MPS will serve as our Rosetta Stone: any idea or person with membership or strong ties to the organization will qualify as “neoliberal.” With further research, we can expand the purview to encompass outer orbits of the Neoliberal Thought Collective.

Anyone who has made a study of politics realizes that the conventional left-right continuum needs to be splintered into numerous subsets and offshoots in order to make any intellectual sense of the cacophony of argumentation to be found therein. This admonition needs repetition in the current context, because of the ubiquitous confusion over the referent and meaning of the term “liberal” in America, even at this late date. Every historian of the New Right in America acknowledges that it is a fractious coalition of groups who may not share much in the way of doctrinal overlap: classical liberals, cultural conservatives, theocons, libertarians, old-school anticommunists, anarchists, classical Burkean traditionalists, ultranationalist neoconservatives, strict construction federalists, survivalist militias, and so forth. A standard narrative of historians of the modern right is that a number of these different factions declared a tentative truce from the 1970s onward under the rubric of “fusionism,” and that this détente was a major factor in their resurgence from a low point after the Great Depression.³⁰ Rather than plow old furrows, we shall provisionally accept this basic account for our own purposes, primarily to insist that “neoliberals” should be approached as one individual subset of this phalanx. Hence we seek to characterize a relatively discrete subset of right-wing thought situated within a much larger universe, although it does tend to stand out as the faction most concerned to integrate economic theory with political doctrine. For that reason alone, it is directly germane to a wider purview of the economic crisis.

Much pandemonium concerning the existence of neoliberalism derives from the fact that outsiders often confuse it with libertarianism or classical liberalism; and this, in turn, is at least partly due to the fact that many key neoliberal figures themselves often conflated one or another alternative position with their own. For instance, Friedrich Hayek notoriously pioneered the notion that his own ideas could be traced in a direct line back to classical liberals such as David Hume and Adam Smith.³¹ Combined with his statement concerning Mont Pèlerin, “I personally do not intend that any public manifesto should be issued,”³² we can begin to detect a concerted policy to blur the boundaries between factions, itself part of the larger move to impose détente. This becomes more obvious in instances when we witness someone like Milton Friedman interacting with other factions on the right:

REASON In seeing yourself harkening back to 19th-century liberalism, you never became a system-builder like Rand or Rothbard . . .

FRIEDMAN Exactly. I’d rather use the term liberal than libertarian.

REASON I see you occasionally use the word libertarian.

FRIEDMAN Oh, I do.

REASON As a concession to accepted usage?

FRIEDMAN That’s right. Because liberal is now so misinterpreted . . . My philosophy is clearly libertarian. However, libertarian is not a self-defining term. There are many varieties of libertarian. There’s zero-government libertarian, an anarchist. There’s a limited-government libertarianism . . . I would like to be a zero-government libertarian.

REASON Why aren’t you?

FRIEDMAN Because I don’t think it’s a feasible social structure.³³

No wonder tyros and outsiders get so flummoxed, when it proves hard to get a straight answer from many neoliberals, even when you profess to be on their side. And the more you become familiar with their writings, it often only gets worse: for instance, it would be a long, thankless task to attempt to extract actual libertarian policy proposals from Friedman’s corpus—a complaint one encounters in some actual libertarian writings. They have to avert their eyes from Friedman quotes such as, “You can have a high degree of social freedom, and a high degree of economic freedom without any political freedom.”³⁴ Strident demonization of some bugbear entity called “the government” is not at all the same as rejecting “The State” tout court.³⁵ That is because mature neoliberalism is not at all enamored of the minimalist night-watchman state of the classical liberal tradition: its major distinguishing characteristic is instead a set of proposals and programs to infuse, take over, and transform the strong state, in order to impose the ideal form of society, which they conceive to be in pursuit of their very curious icon of pure freedom. I agree with Wendy Brown that neoliberalism became a “constructivist” project, no matter how much it was a term against which Hayek often railed.³⁶ That neoliberalism turned out to be very nearly the polar opposite of libertarian anarchism is something that has taken a long while to sink in, but is now becoming widely accepted in circles concerned with political economy.³⁷ That is why “neoliberalism” is not only a historically accurate designation of a specific strain of political thought, but it is descriptively acute as well: most of the early neoliberals explicitly distanced themselves from what they considered the outmoded classical liberal doctrine of laissez-faire.³⁸ They sought to offer something newer, and less passive. Later members like James Buchanan were even more frank regarding the neoliberal attraction to the state, at least when addressing the closed meetings of the MPS:

Among our members, there are some who are able to imagine a viable society without a state . . . For most of our members, however, social order without a state is not readily imagined, at least in any normatively preferred sense . . . Of necessity, we must look at our relations with the state from several windows, to use the familiar Nietzschean metaphor . . . Man is, and must remain, a slave to the state. But it is critically and vitally important to recognize that ten per cent slavery is different from fifty per cent slavery.³⁹

Similar sentiments were expressed at other comparable conclaves. For instance, John MacCallum Scott proposed to the 1956 meetings of the Liberal International, “Liberty, too, must be limited in order to be possessed”; the British economist Arthur Shenfield pronounced in a speech to the 1954 MPS conference, “It does no service either to liberalism or to democracy to assume that democracy is necessarily liberal or liberalism is necessarily democratic.”⁴⁰ Thenceforth, for neoliberals, “freedom” would have to change its connotations.

Thus there are at least two imposing obstacles confronting anyone seeking a deeper understanding of neoliberalism: the fog thrown up around the term “neoliberalism” and attendant doctrines by the participants themselves, in pursuit of their own political unification ambitions and projects with other movements on the right; and the fact that the tenets of neoliberal doctrine evolved and mutated over the postwar period.⁴¹ The ten-plus commandments of neoliberalism were not delivered complete and immaculate down from the Mont in 1947, when the neoliberals convened their first meeting of the MPS. Nor can one reliably reconstruct it from a small set of “Hayekian encyclicals,” as Jamie Peck so aptly puts it. In fact, if we simply restrict ourselves to Mont Pèlerin itself (and this is unduly narrow), there rapidly precipitated at least three distinguishable sects or subguilds: the Austrian-inflected Hayekian legal theory, the Chicago School of neoclassical economics, and the German Ordoliberals.⁴² Hayek himself admitted this in the mid-1980s, when he warned of “the constant danger that the Mont Pèlerin Society might split into a Friedmanite and Hayekian wing.”⁴³ An impartial spectator could observe ongoing tensions between them, but also signs that they eventually cross-fertilized each other. It takes a rather bulky Baedeker to keep it straight; another thing that surely wards off the merely curious outsider.

It is reasonable to wonder what could have held neoliberalism together under the centrifugal forces threatening to fragment it into factionalism. David Harvey propounds the Marxist position that it is straightforwardly a class project masked by various versions of “free market” rhetoric. For him, the ideas are far less significant than the brute function of serving the interests of finance capital and globalized elites in the redistribution of wealth upward. Michael Howard and James King proffer what they term an historical materialist reading, fairly similar to Harvey, one that “stresses the importance of the contradictions inherent in the institutions prevalent in the postwar era, and the crises these contradictions spawned in the 1970s.”⁴⁴ Daniel Stedman Jones divides neoliberalism into three phases characterized by dominant political practices: the prehistory up to the first meeting of Mont Pèlerin, a second phase up to the ascendancy of Reagan and Thatcher consisting of a monetarist critique of neo-Keynesianism, and a modern phase since the 1980s.⁴⁵ Jamie Peck gives greater weight to ideas, suggesting that the fragmentation is real, but still offset by a shared commitment to an unattainable utopian notion of freedom. Nevertheless, he credits success in infiltrating the state as permitting wide latitude in divergent component theories: “Only with the capture of state power could immanent critique become rolling autocritique.”⁴⁶ Peter-Wim Zuidhof suggests that the fragmentation is part of a conscious program of rhetoric to empty out any fixed referent for the term “market.”⁴⁷ Without denying the force of any of these explanations, there are also a few rather more pedestrian considerations of the actual structure of the MPS and its attendant satellite organizations.

I would suggest that the Mont Pèlerin Society evolved into an exceptionally successful structure for the incubation of integrated political theory and political action outside of the more conventional structures of academic disciplines and political parties in the second half of the twentieth century. Perhaps, one day, it will come to be studied as something new in the sociology of knowledge in the twentieth century. It was a novel framework that served to confine any tendencies to intellectual dissolution, holding the three subguilds in productive tension. Hayek in 1946 initially promoted a vision of the MPS as “something halfway between a scholarly association and a political society,”⁴⁸ but it evolved into something much more than that. The main reason the MPS should serve as our talisman in tracking neoliberalism is because it exists as part of a rather special structure of intellectual discourse, perhaps unprecedented in the 1940s, one I would venture to propose to think of as a “Russian doll” approach to the integration of research and praxis in the modern world. The project was to produce a functional hierarchical elite of regimented political intellectuals; as Hayek wrote to Bertrand de Jouvenel, “I sometimes wonder whether it is not more than capitalism this strong egalitarian strain (they call it democracy) in America which is so inimical to the growth of a cultural elite.”⁴⁹ Neoliberals found that Mont Pèlerin was an effective instrument to reconstruct their hierarchy, untethered to local circumstances. Henceforth, I will use the term “thought collective” to refer to this multilevel, multiphase, multisector approach to the building of political capacity to incubate, critique, and promulgate ideas.

The Neoliberal Thought Collective was structured very differently from the other “invisible colleges” that sought to change people’s minds in the latter half of the twentieth century. Unlike most intellectuals in the 1950s, the early protagonists of the MPS did not look to the universities or the academic “professions” or to interest-group mobilizations as the appropriate primary instruments to achieve their goals. Those entities were held too in thrall to the state, from the neoliberal perspective. The early neoliberals felt, at that juncture with some justification, that they were excluded from most high-profile intellectual venues in the West. Hence the MPS was constituted as a closed, private members-only debating society whose participants were hand-picked (originally primarily by Hayek, but later through a closed nomination procedure) and which consciously sought to remain out of the public eye. The purpose was to create a special space where people of like-minded political ideals could gather together to debate the outlines of a future movement diverging from classical liberalism, without having to suffer the indignities of ridicule for their often blue-sky proposals, but also to evade the fifth-column reputation of a society closely aligned with powerful but dubious postwar interests. Even the name of the society was itself chosen to be relatively anodyne, signaling little in the way of substantive content to outsiders.⁵⁰ Many members would indeed hold academic posts in a range of academic disciplines, but this was not a precondition of MPS membership. The MPS could thus also be expanded to encompass various powerful capitalists, and not just intellectuals.

One then might regard specific academic departments where the neoliberals came to dominate before 1980 (University of Chicago Economics, the LSE, L’Institut Universitaire des Hautes Etudes Internationales at Geneva, Chicago Law School, St. Andrews in Scotland, Freiburg, the Virginia School, George Mason University) as the next outer layer of the Russian doll, one emergent public face of the thought collective—although one rarely publicly acknowledging links to the MPS. Another shell of the Russian doll was fashioned as the special-purpose foundations for the education and promotion of neoliberal doctrines; in its early days, these included entities such as the Volker Fund, the Earhart Foundation, the Relm Foundation, the Lilly Endowment, the John M. Olin Foundation, the Bradley Foundation, and the Foundation for Economic Education. These institutions were often set up as philanthropic or charitable units, if only to protect their tax status and seeming lack of bias.⁵¹ Some of these foundations were more than golden showers for the faithful, performing crucial organizational services as well: for instance, the Volker Fund kept a comprehensive “Directory” of affiliated neoliberal intellectuals, a list that had grown to 1,841 names by 1956.⁵² The next shell would consist of general-purpose “think tanks” (Institute for Economic Affairs, American Enterprise Institute, Schweizerisches Institut für Auslandforschung [Swiss Institute of International Studies], the Hoover Institution at Stanford) and satellite organizations such as the Federalist Society that sheltered neoliberals, who themselves might or might not also be members in good standing of various academic disciplines and universities. The think tanks then developed their own next layer of protective shell, often in the guise of specialized satellite think tanks poised to get quick and timely position papers out to friendly politicians, or to provide talking heads for various news media and opinion periodicals.⁵³

To facilitate mass production in a transnational setting, neoliberals actually concocted a “mother of all think tanks” to seed their spawn across the globe. The Atlas Economic Research Foundation was founded in 1981 by Antony Fisher to assist other MPS-related groups in establishing neoliberal think tanks in their own geographic locations. It claims to have had a role in founding a third of all world “market oriented” think tanks, including (among others) the Fraser Institute (Canada), the Center for the Dissemination of Economic Information (Venezuela), the Free Market Center (Belgrade), the Liberty Institute (Romania), and Unirule (Beijing).⁵⁴ Atlas provided, among other services, one convenient conduit to launder contributions from such corporations as Philip Morris and Exxon to more specialized think tanks promoting their intellectual agenda. Later on, the thought collective began to consolidate a separate dedicated journalistic shell to more efficiently channel the output of inner layers of the Russian doll outward, such as Rupert Murdoch’s News Corporation,⁵⁵ Bertelsmann AG, and a wide array of Internet blog and social networking sites.

When addressing their venture capital angels, the entrepreneurs of the Russian doll would admit that this interlocking set of institutions should be regarded as an integrated system for the production of political ideas. For instance, Richard Fink, one of the primary protagonists in building up George Mason University as a neoliberal outpost, by linking it directly to the Koch Foundation, of which he later became president, informed his prospective funders:

The translation of ideas into action requires the development of intellectual raw materials, their conversion into specific policy products, and the marketing and distribution of these products to citizen-consumers. Grant makers, Fink argued, would do well to invest in change along the entire production continuum, funding scholars and university programs where the intellectual framework for social transformation is developed, think tanks where scholarly ideas get translated into specific policy proposals, and implementation groups to bring these proposals into the political marketplace and eventually to consumers.⁵⁶

Although the language dealt in terms of “markets” and “consumers,” the reality was a vertically integrated set of operations, whose outlines were apparent by the 1980s. The expansion of the think-tank shell proceeded apace with the expansion of the MPS presence, as revealed in Figure 2.1. One can appreciate the amount of groundwork that had preceded the “breakout” decade of the 1980s for the neoliberal project described by Fink from this and other indicators of the activities of the thought collective.

Figure 2.1: Growth of MPS-Affiliated Think Tanks

Source: Walpen, Die offen Feinde und ihre Gesellschaft

Further outer shells have cladded and been augmented around the Russian doll as we get closer to the present—for instance, “astroturf” organizations consisting of supposedly local grass-roots members, frequently organized around religious or single-issue campaigns.⁵⁷ Some aspects of the so-called Tea Party in the U.S. reveal how the practice of astroturfing has had direct impact upon reactions to the crisis. “FreedomWorks say they hope to turn the inchoate anger of the Tea Party into a focused pro-Hayek movement.”⁵⁸ Fostering the appearance of spontaneous organization was often just as important for neoliberals as the actual political action that the astroturf organization was tasked to accomplish. Outsiders would rarely perceive the extent to which individual protagonists embedded in a particular shell served multiple roles, or the strength and pervasiveness of network ties, since they could never see beyond the immediate shell of the Russian doll right before their noses. This also tended to foster the impression of those “spontaneous orders” so beloved by the neoliberals, although they were frequently nothing of the sort. Moreover, the loose coupling defeated most attempts to paint the thought collective as a strict conspiracy. It was much beyond that, in the sense it was a thought collective in pursuit of a mass political movement; and in any event, it was built up through trial and error over time. It grew so successful, it soon became too large to qualify.

Figure 2.2: MPS Founding Meeting, 1947

The MPS edifice of neoliberalism was anchored by a variety of mainly European and American keystones, progressively encompassed a variety of economic, political, and social schools of thought, and maintained a floating transnational agora for debating solutions to perceived problems, a flexible canopy tailored with an eye to accommodating established relations of power in academia, politics, and society at large. It was never parochial, and was globally oriented before “globalization” became a buzzword. Max Thurn captured this aspect in his opening remarks to the 1964 Semmering MPS meeting:

Many of you have been to Austria before. There is little I can tell them about the country that they do not know already. Others have come for the first time. They may like to get a general idea of what this country was and what it is now before the meeting begins. What I can say on this subject has of course nothing to do with the topics of this programme. As members of the Mont Pèlerin Society we are not interested in the problems of individual nations or even groups of nations. What concerns us are general issues such as liberty and private initiative.⁵⁹

This division of labor between the global thought collective and the parochial political action rapidly proved a transnational success; and by capping formal membership at five hundred, became another exclusive mark of distinction for famous right-wing aspirants. The global reach of its membership is displayed in the two maps of membership: at its inception, and then in 1991.

Figure 2.3: MPS Membership, 1991

The unusual structure of the thought collective helps explain why neoliberalism cannot be easily inscribed on a set of three-by-five cards, and needs to be understood as a pluralist entity (within certain limits) striving to distinguish itself from its three primary foes: laissez-faire classical liberalism, social-welfare liberalism, and socialism. Contrary to the dichotomies and rigidities that characterized classical liberalism with regard to its proposed firewalls between economics and politics, neoliberalism has to be understood as a flexible and pragmatic response to the previous crisis of capitalism (viz., the Great Depression) with a clear vision of what needed to be opposed by all means: a planned economy and a vibrant welfare state. Contrary to some narrow interests of some corporate captains (including some in the MPS), neoliberal intellectuals understood this general goal to imply a comprehensive long-term reform effort to retat the entire fabric of society, not excluding the corporate world. The relationship between the neoliberals and capitalists was not merely that of passive apologists. Neoliberals aimed to develop a thoroughgoing reeducation effort for all parties to alter the tenor and meaning of political life: nothing more, nothing less.⁶⁰ Neoliberal intellectuals identified their immediate targets as elite civil society. Their efforts were primarily aimed at winning over intellectuals and opinion leaders of future generations, and their primary instrument was redefining the place of knowledge in society, which also became the central theme in their theoretical tradition. As Hayek said in his address to the first meeting of the MPS:

But what to the politicians are fixed limits of practicability imposed by public opinion must not be similar limits to us. Public opinion on these matters is the work of men like ourselves . . . who have created the political climate in which the politicians of our time must move . . . I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.⁶¹

The Russian doll structure of the Neoliberal Thought Collective would tend to amplify and distribute the voice of any one member throughout a series of seemingly different organizations, personas, and broadcast settings, lending it resonance and gravitas, not to mention fronting an echo chamber for ideas right at the time when hearing them was most propitious. Not without admiration, we have to concede that neoliberal intellectuals struggled through to a deeper understanding of the political and organizational character of modern knowledge and science than did their opponents on the left, and therefore present a worthy contemporary challenge to everyone interested in the archaeology of knowledge.

Of course, neoliberalism should not then or now be reduced to the MPS and the roster of related think tanks—that would be a travesty of the history.⁶² My stress on the MPS and the Russian doll serves to counter the tendency on the left to regard neoliberalism as a hopelessly diffuse and ill-defined movement. In subsequent chapters we will explore how neoliberal ideas have become rooted in the economics profession, as well as in many facets of everyday life, which of course extends outside the narrow circumference of MPS activities. And then there are the consequences of transformation of political parties on the right and left, which tend to occupy much more attention in the existing literature. Nevertheless, at least until the 1980s—when the advance of neoliberal ideas, and thus the success of the original neoliberal networks, led to a rapid multiplication of pretenders to the title of progenitors of neoliberalism—the MPS network can be safely used as cipher to decode with sufficient precision the neoliberal thought style in the era of its genesis.

Of course, such considerations do not have the same salience once we get to the current economic crisis. While the detailed research is yet to be conducted, outsider perceptions of the modern MPS suggest that it no longer serves as the cornucopia of blue sky thinking and rigorous debate which then gets conveyed to the outer shells of the Russian doll in the ways that it did during the 1950s and 1960s. Part of the problem seems to have been that, as neoliberals savored political success, membership in the core MPS came to be just another “positional good” especially prized by the idle rich with intellectual pretensions. As the composition of the membership skewed in the direction of the sort of persons more often found at Davos or the Bohemian Grove, the actual role of the core as a high-powered debating society has tended to ossify. That function, it seems, tended to migrate to outer layers of the Russian doll, such as certain key university centers and the larger established think tanks. When the crisis hit, the first tendency was to attempt a reversion to the older model of a Grand Conclave of the Faithful; but as we observed in chapter 1, the best that was mustered was a reiteration of doctrines developed a half-century previously. However, in chapter 6, we moot the possibility that the outer shells themselves have developed a generic full-spectrum pattern of political response to dire crises. If true, it means that neoliberalism has become more coherent in the face of the crisis, not more diffuse, as some authors maintain.

A Short Course in Neoliberal Economic Doctrine

Throughout the second half of the twentieth century, the neoliberal project stood out from other strains of right-wing thought in that it self-consciously was constituted as a multitiered sociological entity dedicated to the continued transnational development, promulgation, and popularization of doctrines intended to mutate over time, in reaction to both intellectual criticism and external events. It was a movable feast, and not a catechism fixed at the Council of Trent.⁶³ Much of the time the litmus test was shared political objectives inculcated through prolonged internship in the thought collective; but infrequently, even that was open to delicate negotiation. Nevertheless, it was a sociological thought collective that eventually produced a relatively shared ontology concerning the world coupled with a more-or-less shared set of propositions about markets and political economy. These propositions are, of necessity, a central focus of a book on the relationship of neoliberals to the crisis. It should be very important to have some familiarity with these ideas, if only to resist simple-minded characterizations of the neoliberal approach to the crisis as some evangelical “market fundamentalism.”

Although it is undeniably the case that all manner of secondhand purveyors of ideas on the right would wish to crow that “market freedom” promotes their own brand of religious righteousness, or maybe even the converse, it nonetheless debases comprehension to conflate the two by disparaging both as “fundamentalism”—a sneer unfortunately becoming commonplace on the left. It seems very neat and tidy to assert that neoliberals operate in a modus operandi on a par with religious fundamentalists: just slam The Road to Serfdom (or if you are really Low-to-No Church, Atlas Shrugged) on the table along with the King James Bible, and then profess to have unmediated personal access to the original true meaning of the only (two) book(s) you’ll ever need to read in your lifetime. Counterpoising morally confused evangelicals with the reality-based community may seem tempting to some; but it dulls serious thought. It may sometimes feel that a certain market-inflected personalized version of Salvation has become more prevalent in Western societies, but that turns out to be very far removed from the actual content of the neoliberal program.

Neoliberalism does not impart a dose of that Old Time Religion. Not only is there no ur-text of neoliberalism; the neoliberals have not themselves opted to retreat into obscurantism, however much it may seem that some of their fellow travelers may have done so. You won’t often catch them wondering, “What Would Hayek Do?” Instead they developed an intricately linked set of overlapping propositions over time—for example, from Ludwig Erhard’s “social market economy” to Herbert Giersch’s cosmopolitan individualism, from Milton Friedman’s “monetarism” to the rational-expectations hypothesis, from Hayek’s “spontaneous order” to James Buchanan’s constitutional order, from Gary Becker’s “human capital” to Steven Levitt’s “freakonomics,” from Heartland’s climate denialism to AEI’s geoengineering project, and, most appositely, from Hayek’s “socialist calculation controversy” to Chicago’s efficient-markets hypothesis. Along the way they have lightly sloughed off many prior classical liberal doctrines—for instance, opposition to corporate monopoly power as politically debilitating, or skepticism over strong intellectual property, or disparaging finance as an intrinsic source of macroeconomic disturbance—without coming clean on their reversals.⁶⁴

Acknowledgment of neoliberalism as a living, mutating entity makes it hard for people who are not historians to wrap their arms around the phenomenon, and prompts those seeking a three-by-five-card definition to throw up their hands in defeat. Disbelievers and skeptics often scoff when they hear about the mutable character of neoliberal doctrine, but I think they ought to pay a little attention to science studies, which seems quite comfortable tracking functional identity-within-change by combining institutional data with a rotating yet finite roster of protagonists, with an old-fashioned history of ideas. For instance, what did it mean to be “doing quantum physics” in the 1960s and ’70s? It wasn’t just big teams working on solid-state devices plus a few geniuses in pursuit of a Grand Unified Theory. It even extended to hippie communes and New Age consciousness. Or, in another case, the pursuit of cosmological theories has a colorful coherent history, even though it repeatedly transgressed the boundaries of existing sciences, and sometimes had trouble deciding if the object of its attentions typified stark stasis or dramatic metamorphosis.⁶⁵ As long as we possess similar multiple markers of participation and discernment of designated doctrines for the Neoliberal Thought Collective, from exclusive organizations like the MPS and certain designated think tanks, to denumerable membership lists to vade mecum texts covering keynote ideas and theories, to archival reflections of the principals, then a working characterization of neoliberalism is perfectly possible.

Quite a few perceptive historians of the NTC have worried that this Protean entity might be a little too variable to underwrite serious intellectual analysis.⁶⁶ “There may therefore be a certain degree of truth in what might otherwise seem to be a sloppy and unprincipled claim, that neoliberalism has become omnipresent, but it is a complex, mediated and heterogeneous kind of omnipresence, not a state of blanket conformity. Neoliberalism has not simply diffused as a (self-) replicating system.”⁶⁷ Granted, the ectoplasmic theory of mind control is usually a poor way to contemplate analysis of politics; yet the point remains that the neoliberal ground troops seem to be fully capable of recognizing kindred spirits, fostering intellectual interchange among allies, and more to the point, funding and organizing political movements with stable objectives and repetitive arguments even in the face of the global economic crisis. Here we point to bellwether phenomena to be addressed, from the demonization of Freddie Mac and Fannie Mae to the neutralization of financial reform at both national and international levels, the promotion of class warfare against public employees by “populist” right-wing politicians to the total control over framing the problem of global warming, from the best-sellerdom of The Road to Serfdom to the astroturfing of the Tea Party, and, most notably, the pronounced shift of public attention from the culpability of banks and hedge funds to the predominant conviction that the crisis has been attributable to governmental fiscal irresponsibility. These suggest a degree of coherence and stability deriving from both continuity of intellectual tradition and persistence of community boundary work, the sum total of which is capable of supporting analytical generalizations about the movement.

Clearly, neoliberals do not navigate with a fixed static Utopia as the astrolabe for all their political strivings. They could not, since they don’t even agree on such basic terms as “market” and “freedom” in all respects, as we shall observe below. One can even agree with Brenner et al. and Naomi Klein that crisis is the preferred field of action for neoliberals, since that offers more latitude for introduction of bold experimental ‘reforms’ that only precipitate further crises down the road.⁶⁸ Nevertheless, Neoliberalism does not dissolve into a gormless empiricism or random pragmatism. There persists a certain logic to the way it approaches crises; and that is directly relevant to comprehending its unexpected strength in the current global crisis.

Under that supposition, we endeavor here to provide a telegraphed and necessarily non-canonical characterization of the temporary configuration of doctrines that the thought collective had arrived at by roughly the 1980s. It transgresses disciplinary boundaries, in precisely the ways the neoliberals have done. Furthermore, the Thirteen Commandments below are chosen because they have direct bearing upon unfolding developments during the period of the crisis from 2007 onwards. To elide issues of who said what to whom, in and out of Mont Pèlerin, we provide the tenets in an abridged format of stark statements, without much individual elaboration or full documentation.⁶⁹

[1] The starting point of neoliberalism is the admission, contrary to classical liberal doctrine, that their vision of the good society will triumph only if it becomes reconciled to the fact that the conditions for its existence must be constructed, and will not come about “naturally” in the absence of concerted political effort and organization. As Foucault presciently observed in 1978 “Neoliberalism should not be confused with the slogan ‘laissez-faire,’ but on the contrary, should be regarded as a call to vigilance, to activism, to perpetual interventions.” The injunction to act in the face of inadequate epistemic warrant is the very soul of “constructivism,” an orientation sometimes shared with the field of science studies, and the very soul of the Neoliberal Thought Collective. Classical liberalism, by contrast, disavowed this precept. As Sheldon Wolin once wrote, classical liberalism “conceived the issue as one of reconciling freedom and authority, and they solved it by destroying authority in the name of liberty and replacing it by society.” The neoliberals reject “society” as solution, and revive their version of authority in new guises. This becomes transmuted below into various arguments for the existence of a strong state as both producer and guarantor of a stable market society. As Peck puts it, “Neoliberalism was always concerned . . . with the challenge of first seizing and then retasking the state.” “What is ‘neo’ about Neoliberalism . . . [is] the remaking and redeployment of the state as the core agency that actively fabricates the subjectivities, social relations and collective representations suited to making the fiction of markets real and consequential.”⁷⁰

[2] This assertion of a constructivist orientation raises the thorny issue of just what sort of ontological entity the neoliberal market is, or should be. What sort of “market” do neoliberals want to foster and protect? While one wing of the MPS (the Chicago School) has made its career by attempting to reconcile one version of neoclassical economic theory with neoliberal precepts, other subsets of the MPS have innovated entirely different characterizations of the market. The “radical subjectivist” wing of the Austrian School of economics attempted to ground the market in a dynamic process of discovery by entrepreneurs of what consumers did not yet even know that they wanted, due to the fact that the future is radically unknowable.⁷¹ Perhaps the dominant version at the MPS (and later, the dominant cultural doctrine) emanated from Hayek himself, wherein the “market” is posited to be an information processor more powerful than any human brain, but essentially patterned upon brain/computation metaphors.⁷² This version of the market is most intimately predicated upon modern epistemic doctrines, which in the interim have become the philosophical position most closely associated with the neoliberal Weltanschauung.

Here we find the first intimate point of connection with the narrative of the global crisis. From this perspective, prices in an efficient market “contain all relevant information” and therefore cannot be predicted by mere mortals. In this version, the market always surpasses the state’s ability to process information, and this constitutes the kernel of the argument for the necessary failure of socialism. All attempts to outguess the market, even in the midst of crisis free fall, must fail. But far from a purely negative doctrine, another related version of the efficient-markets hypothesis underwrote much of the theories and algorithms that were the framework of the baroque financial instruments and practices which resulted in the crisis in the first place.

Another partially rival approach to defining the market emanated from German ordoliberalism, which argues that competition in a well-functioning market needs to be directly organized by the state, by embedding it in various other social institutions.⁷³ Hence, contrary to much that has been written on the beliefs of our protagonists, neoliberals do not speak with one voice on the key concept of the nature of the market. They most certainly do not uniformly subscribe to neoclassical economic theory, nor do they all pledge their troth to the cybernetic vision of the market in lockstep. (This reiterates the analytical separation broached in chapter 1.)

It may seem incredible, but historically, both the neoclassical tradition in economics and the NTC have been extremely vague when it comes to analytical specification of the exact structure and character of something they both refer to as the “market” Both seem overly preoccupied with what it purportedly does, while remaining cavalier about what it actually is. For the neoliberals, this allows the avoidance of a possible deep contradiction between their constructivist tendencies and their uninflected appeal to a monolithic market that has existed throughout all history and indifferently across the globe; for how can something be “made” when it is eternal and unchanging? This is solved by increasingly erasing any distinctions among the state, society, and the market, and simultaneously insisting their political project is aimed at reformation of society by subordinating it to the market.

[3] Even though there has not existed full consensus on just what sort of animal the market “really” is, the neoliberals did agree that, for purposes of public understanding and sloganeering, neoliberal market society must be treated as a “natural” and inexorable state of mankind. Neoliberal thought therefore spawns a strange hybrid of the “constructed” and the “natural,” where the market can be made manifest in many guises.⁷⁴ What this meant in practice was that there grew to be a mandate that natural science metaphors must be integrated into the neoliberal narrative. (This is explored further in chapter 6.) It is noteworthy that MPS members began to explore the portrayal of the market as an evolutionary phenomenon long before biology displaced physics as the premier science in the modern world-picture.⁷⁵ If the market was just an elaborate information processor, so too was the gene in its ecological niche. Poor, unwitting animals turn out to maximize everything under the sun just like neoclassical economic agents, and cognitive science “neuroeconomics” models treat neurons as market participants. “Biopower” is deployed to render nature and our bodies more responsive to market signals.⁷⁶ Because of this early commitment, neoliberalism was able to make appreciable inroads into such areas as “evolutionary psychology,” network sociology, ecology, animal ethology, linguistics, cybernetics, and even science studies. Neoliberalism has therefore expanded to become a comprehensive worldview, and has not been just a doctrine solely confined to economists.⁷⁷

With regard to the crisis, one wing of neoliberals has appealed to natural science concepts of “complexity” to suggest that markets transcend the very possibility of management of systemic risk.⁷⁸ However, the presumed relationship of the market to nature tends to be substantially different under neoliberalism than under standard neoclassical theory. In brief, neoclassical theory has a far more static conception of market ontology than do the neoliberals. In neoclassical economics, many theoretical accounts portray the market as somehow susceptible to “incompleteness” or “failure,” generally due to unexplained natural attributes of the commodities traded: these are retailed under the rubric of “externalities,” “incomplete markets,” or other “failures.” Neoliberals conventionally reject all such recourse to defects or glitches, in favor of a narrative where evolution and/or “spontaneous order” brings the market to ever more complex states of self-realization, which may escape the ken of mere humans.⁷⁹ This explains why the NTC has rejected out of hand all neoclassical “market failure” explanations of the crisis.

[4] A primary ambition of the neoliberal project is to redefine the shape and functions of the state, not to destroy it. Neoliberals thus maintain an uneasy and troubled alliance with their sometimes fellow-travelers, the anarchists. The contradiction with which the neoliberals constantly struggle is that a strong state can just as easily thwart their program as implement it; hence they are inclined to explore new formats of techno-managerial governance that protect their ideal market from what they perceive as unwarranted political interference. Considerable efforts have been developed to disguise or otherwise condone in rhetoric and practice the importance of the strong state that neoliberals endorse in theory. As Peck puts it, the pursuit of neoliberal policies is “a self-contradictory form of regulation-in-denial.”⁸⁰ One implication is that democracy, ambivalently endorsed as the appropriate state framework for an ideal market, must in any case be kept relatively impotent, so that citizen initiatives rarely are able to change much of anything.⁸¹ As Hayek said in an address before the MPS in 1966: “Liberalism and democracy, although compatible, are not the same . . . it is at least possible in principle that a democratic government may be totalitarian and that an authoritarian government may act on liberal principles . . . [A state] demanding unlimited power of the majority, has essentially become anti-liberal.”⁸²

One way to exert power in restraint of democracy is to bend the state to a market logic, pretending one can replace “citizens” with “customers” (see point 5). Consequently, the neoliberals seek to restructure the state with numerous audit devices (under the sign of “accountability” or the “audit society”) or impose rationalization through introduction of the “new public management”; or, better yet, convert state services to private provision on a contractual basis.⁸³ Here again our commandments touch directly upon the crisis. The financial sector was one of the major sites of the outsourcing of state supervision to quasi-private organizations, such as the Financial Industry Regulation Authority (FINRA) or the credit rating agencies such as Moody’s, Fitch, and Standard & Poor’s.⁸⁴ Indeed, the very “privatization” of the process of securitization of mortgages, which had started out in the 1960s as a government function, has become a flash point in explanations of how the financial sector lost its way. The willful blurring of the line between a private firm and a political instrument in the United States in the cases of Freddie Mac and Fannie Mae will be treated in chapter 5.

One of the great neoliberal flimflam operations is to mask their role in power through confusion of “marketization” of government functions with the shrinking of the state: if anything, bureaucracies become more unwieldy under neoliberal regimes.⁸⁵ Another is to imagine all manner of methods to “shackle” the state by reducing all change to prohibitive constitutional maneuvers (as with the “public choice” school of James Buchanan). In practice, “deregulation” always cashes out as “reregulation,” only under a different set of ukases.

[5] Skepticism about the lack of control of democracy is periodically offset by recognition of the persistent need for a reliable font of popular legitimacy for the neoliberal market state. This is a thorny problem for neoliberals: how to maintain their pretence of freedom as noncoercion when, in practice, it seems unlikely that most people would freely choose the neoliberal version of the state. As Hayek once wrote: “It would be impossible to assert that a free society will always and necessarily develop values of which we would approve, or even, as we shall see, that it will maintain values which are compatible with the preserva­tion of freedom.”⁸⁶ In one sense, the NTC is itself one practical political solution to this conundrum: the Russian doll exists, in part, as a conscious intervention to change the culture in a direction more favorable to the neoliberals by disarming political opposition. However, since the very project itself could be regarded as violating a precept of the inviolability of individual volition, the neoliberals also have proposed a conceptual “fix” for the audacity of intervention.

Neoliberals seek to transcend the intolerable contradiction of democratic rejection of the neoliberal state by treating politics as if it were a market, and promoting an economic theory of “democracy.” In its most advanced manifestation, there is no separate content of the notion of citizenship other than as customer of state services.⁸⁷ This supports the application of neoclassical economic models to previously political topics; but it also explains why the neoliberal movement must seek to consolidate political power by operating from within the state. The abstract “rule of law” is frequently conflated with or subordinated to conformity to the neoliberal vision of an ideal market. The “night watchman” version of the state is thus comprehensively repudiated: there is no separate sphere of the market, fenced off, as it were, from the sphere of civil society. Everything is fair game for marketization.

The neoliberals generally have to bend in pretzels to deny that in their ideal state, law is a system of power and command, and is, rather, a system of neutral general rules applicable equally to all, grounded in something other than the intentional goals of some (that is, their own) group’s political will. As Raymond Plant explains, for the Rothbard anarchists, this is something like natural law; for the Buchanan-style public-choice crowd, it is contract theory; for Chicago economics, it is a world where the economy is conflated with the universe of human existence; and for Hayek, it is his own idiosyncratic notion of cultural evolution.⁸⁸ In everyday neoliberalism, the Chicago story seems to win out. However, in the recent crisis, the evolution story has been brought out of mothballs, as we shall observe in chapter 6.

[6] Neoliberalism thoroughly revises what it means to be a human person. Many people have quoted Foucault’s prescient observation from three decades ago: “In neoliberalism . . . Homo Economicus is an entrepreneur, an entrepreneur of himself.”⁸⁹ However, they overlook the extent to which this is a drastic departure from classical liberal doctrine.

Classical liberalism identified “labor” as the critical original human infusion that both created and justified private property. Foucault correctly identifies the concept of “human capital” as the signal neoliberal departure—initially identified with the MPS member Gary Becker—that undermines centuries of political thought that parlayed humanism into stories of natural rights. Not only does neoliberalism deconstruct any special status for human labor, but it lays waste to older distinctions between production and consumption rooted in the labor theory of value, and reduces the human being to an arbitrary bundle of “investments,” skill sets, temporary alliances (family, sex, race), and fungible body parts. “Government of the self” becomes the taproot of all social order, even though the identity of the self evanesces under the pressure of continual prosthetic tinkering; this is one possible way to understand the concept of “biopower.” Under this regime, the individual displays no necessary continuity from one “decision” to the next. The manager of You becomes the new ghost in the machine.⁹⁰

Needless to say, the rise of the Internet has proven a boon for neoliberals; and not just for a certain Randroid element in Silicon Valley that may have become besotted with the doctrine. Chat rooms, online gaming, virtual social networks, and electronic financialization of household budgets have encouraged even the most intellectually challenged to experiment with the new neoliberal personhood. A world where you can virtually switch gender, imagine you can upload your essence separate from your somatic self, assume any set of attributes, and reduce your social life to an arbitrary collection of statistics on a social networking site is a neoliberal playground. The saga of dot.com billionaires, so doted over by the mass media, drives home the lesson that you don’t actually have to produce anything tangible to participate in the global marketplace of the mind. This is the topic of chapter 3.

The Incredible Disappearing Agent has had all sorts of implications for neoliberal political theory. First off, the timeworn conventional complaint that economics is too pigheadedly methodologically individualist does not begin to scratch the neoliberal program. “Individuals” are merely evanescent projects from a neoliberal perspective. Neoliberalism has consequently become a scale-free Theory of Everything: something as small as a gene or as large as a nation-state is equally engaged in entrepreneurial strategic pursuit of advantage, since the “individual” is no longer a privileged ontological platform. Second, there are no more “classes” in the sense of an older political economy, since every individual is both employer and worker simultaneously; in the limit, every man should be his own business firm or corporation; this has proven a powerful tool for disarming whole swathes of older left discourse. It also appropriates an obscure historical development in American legal history—that the corporation is tantamount to personhood—and blows it up to an ontological principle. Conversely, it denies personhood to government: “Government has no economic responsibility. Only people have responsibility, and government is not a person.”⁹¹ Third, since property is no longer rooted in labor, as in the Lockean tradition, consequently property rights can be readily reengineered and changed to achieve specific political objectives; one observes this in the area of “intellectual property,” or in a development germane to the crisis, ownership of the algorithms that define and trade obscure complex derivatives, and better, to reduce the formal infrastructure of the marketplace itself to a commodity. Indeed, the recent transformation of stock exchanges into profit-seeking IPOs was a critical neoliberal innovation leading up to the crisis. Classical liberals treated “property” as a sacrosanct bulwark against the state; neoliberals do not. Fourth, it destroys the whole tradition of theories of “interests” as possessing empirical grounding in political thought.⁹²

Clearly, we’re not in classical liberalism anymore.

[7] Neoliberals extol “freedom” as trumping all other virtues; but the definition of freedom is recoded and heavily edited within their framework. Most neoliberals insist they value “freedom” above all else; but more hairs are split in the definition of freedom than over any other neoliberal concept. This is probably a necessary consequence of the development of other neoliberal tenets, like that covered in thesis 6. It is a little hard to conceptualize freedom for an entity that displays no quiddity or persistence; and most neoliberal discussions of freedom have been cut loose from older notions of individualism.

Some members of the Neoliberal Thought Collective, like Milton Friedman, have refused to define it altogether (other than to divorce it from democracy), while others like Friedrich Hayek forge links to thesis 2 by motivating it as an epistemic virtue: “the chief aim of freedom is to provide both the opportunity and the inducement to insure the maximum use of knowledge that an individual can accrue.” As this curious definition illustrates, for neoliberals, what you think a market really is seems to determine your view of what liberty means. Almost immediately, the devil is secreted in the details, since Hayek feels he must distinguish “personal liberty” from subjective freedom, since personal liberty does not entail political liberty. Late in life, Milton Friedman posited three species of freedom—economic, social and political—but it appears that economic freedom was the only one that mattered. Some modern figures such as Amartya Sen attempt to factor in your given range of choices in an index of your freedom, but neoliberals will have none of that. They seek to paint all “coercion” as evil, but without admitting into consideration any backstory of the determinants of your intentions. Everyone is treated as expressing untethered context-free hankering, as if they were born yesterday into solitary confinement; this is the hidden heritage of entrepreneurialism of the self. This commandment cashes out as: no market can ever be coercive.⁹³

In practice, neoliberals can’t let others contemplate too long that their peculiar brand of freedom is not the realization of any political, human, or cultural telos, but rather the positing of autonomous self-governed entities, all coming naturally equipped with some version of “rationality” and motives of ineffable self-interest, striving to improve their lot in life by engaging in market exchange.⁹⁴ It follows from the human-capital concept that education is a consumer good, not a life-transforming experience. Followers of Foucault are often strongest on the elaborate revision required in cultural concepts of human freedom and morality, although this may be attributed to Foucault’s own sympathies for elements of the neoliberal project.⁹⁵ Curiously enough, the fact that this version of “freedom” may escape all vernacular referent was noted when an argument broke out within the MPS in the 1970s, with Irving Kristol accusing Milton Friedman and Friedrich Hayek of depending upon a version of “self-realization” as the great empty void at the center of their economic doctrines.⁹⁶ You can’t realize a Kantian essence that is not there.

Whatever else it betokens in the neoliberal pantheon, it is axiomatic that freedom can only be “negative” for neoliberals (in the sense of Isaiah Berlin), for one very important reason. Freedom cannot be extended from the use of knowledge in society to the use of knowledge about society, because self-examination concerning why one passively accepts local and incomplete knowledge leads to contemplation of how market signals create some forms of knowledge and squelch others. Meditation upon our limitations leads to inquiry into how markets work, and metareflection on our place in larger orders, something that neoliberals warn is beyond our ken. Knowledge then assumes global institutional dimensions, and this undermines the key doctrine of the market as transcendental superior information processor. Conveniently, “freedom” does not extend to principled rejection of the neoliberal insurgency. Neoliberals want to insist that resistance to their program is futile, since it inevitably appeals to a spurious (from their perspective) understanding of freedom.

[8] Neoliberals begin with a presumption that capital has a natural right to flow freely across national boundaries. (The free flow of labor enjoys no similar right.⁹⁷) Since that entails persistent balance-of-payments problems in a nonautarkic world, neoliberals took the lead in inventing all manner of transnational devices for the economic and political discipline of nation-states.⁹⁸ They began by attempting to reintroduce what they considered to be pure market discipline (flexible exchange rates, dismantling capital controls) during the destruction of the Bretton Woods system, but over the longer term learned to appreciate that suitably staffed international institutions such as the WTO, the World Bank, the IMF, and other units are better situated to impose neoliberal policies upon recalcitrant nation-states. Initially strident demands to abolish global financial (and other) institutions on the part of early neoliberals such as Friedman and some denizens of the Cato Institute were subsequently tempered by others—such as Anne Krueger, Stanley Fischer, and Kenneth Rogoff—and as these neoliberals came to occupy these institutions, they used them primarily to influence staffing and policy decisions, and thus to displace other internationalist agendas. The role of such transnational organizations was recast to exert “lock-in” of prior neoliberal policies, and therefore to restrict the range of political options of national governments. Sometimes they were also used to displace indigenous “crony capitalists” with a more cosmopolitan breed of cronyism. Thus it is correct to observe an organic connection between such phenomena as the Washington Consensus and the spread of neoliberal hegemony, as Dieter Plehwe argues.⁹⁹ This also helps address the neoliberal conundrum of how to both hem in and at the same time obscure the strong state identified in point 4, above.

The relevance of the rise of the neoliberal globalized financial regime to the crisis is a matter of great concern to the thought collective and to others (such as Ben Bernanke) who seek to offload responsibility for the crash onto someone else. Because there was no obvious watershed linking policy to theory comparable to Bretton Woods, and the post-1980 infrastructure of international finance grew up piecemeal, the relationship between neoliberalism and the growth of shadow and offshore banking is only beginning to be a subject of interest. Evidence, by construction, is often inaccessible. However, the drive to offshore outsource manufacturing in the advanced economies, which was mutually symbiotic with the frustration of capital controls, was clearly a function of neoliberal doctrines concerning the unbounded benefits of freedom of international trade, combined with neoliberal projects to reengineer the corporation as an arbitrary nexus of contractual obligations, rather than as a repository of production expertise. The MPS member Anne Krueger was brought into dialogue with her fellow member Ronald Coase, and the offspring was the flight of capital to countries such as China, India, and the Cayman Islands. The role of China as beneficiary, but simultaneously as part-time repudiator of the neoliberal globalized financial system, is a question that bedevils all concerned.

While freedom of capital flows have not generally been stressed by neoliberals as salient causes of the crisis, they do manage to unite in opposition to capital controls as one reaction to the crisis.

[9] Neoliberals regard inequality of economic resources and political rights not as an unfortunate by-product of capitalism, but a necessary functional characteristic of their ideal market system. Inequality is not only the natural state of market economies from a neoliberal perspective, but it is actually one of its strongest motor forces for progress. Hence the rich are not parasites, but a boon to mankind. People should be encouraged to envy and emulate the rich. Demands for equality are merely the sour grapes of the losers, or if they are more generous, the atavistic holdovers of old images of justice that must be extirpated from the modern mind-set. As Hayek wrote, “The market order does not bring about any close correspondence between subjective merit or individual needs and rewards.”¹⁰⁰ Indeed, this lack of correlation between reward and effort is one of the major inciters of (misguided) demands for justice on the part of the hoi polloi, and the failure of democratic systems to embrace the neoliberal state, as discussed in tenet 5, above. “Social justice” is blind, because it remains forever cut off from the Wisdom of the Market. Thus, the vast worldwide trend toward concentration of income and wealth since the 1990s is the playing out of a neoliberal script to produce a more efficient and vibrant capitalism.

Here again we touch upon the recent crisis. This particular neoliberal precept dictates that the widely noted exacerbation of income inequality in the United States since 1980 cannot possibly have played a role in precipitating the crisis in any way.¹⁰¹ Indeed, attempts by the state to offset or ameliorate the trend toward inequality of wealth—especially through attempts to expand home ownership and consumer credit—become themselves, for neoliberals, major root causes of the crisis.¹⁰² This then gets translated into the preferred neoliberal story of the crisis, which attributes culpability to the Democrats by lodging blame for the housing bubble via securitization with Fannie Mae and Freddie Mac (see chapter 5).

[10] Corporations can do no wrong, or at least they are not to be blamed if they do. This is one of the stronger areas of divergence from classical liberalism, with its ingrained suspicion of power concentrated in joint stock companies and monopoly stretching from Adam Smith to Henry Simons. The MPS set out in the 1950s entertaining suspicions of corporate power, with the ordoliberals especially concerned with the promotion of strong antitrust capacity on the part of the state. But starting with the Chicago law and economics movement, and then progressively spreading to treatments of entrepreneurs and the “markets for innovation,” neoliberals began to argue consistently that not only was monopoly not harmful to the operation of the market, but an epiphenomenon attributable to the misguided activities of the state and powerful interest groups.¹⁰³ The twentieth-century socialist contention that capitalism bore within itself the seeds of its own arteriosclerosis (if not self-destruction) was baldly denied. By the 1970s, antitrust policies were generally repudiated in the United States, as neoliberals took the curious anomaly in American case law treating corporations as legal individuals and tended to inflate it into a philosophical axiom.¹⁰⁴ Indeed, if anything negative was ever said about the large corporation, it was that separation of ownership from control might conceivably pose a problem, but this was easily rectified by giving CEOs appropriate “incentives” (massive stock options, golden handshakes, latitude beyond any oversight) and instituting marketlike evaluation systems within the corporate bureaucracy, rectifying “agency problems.”¹⁰⁵ Thus the modern “reengineering of the corporation” (reduced vertical integration, outsourcing supply chains, outrageous recompense for top officers) is itself an artifact of the neoliberal reconceptualization of the corporation.

This literature had a bearing on the crisis, since it was used to argue against aspersions cast that many financial firms were “Too Big to Bail,” and that the upper echelons in those firms were garnishing dangerously high compensation packages. Nothing succeeds like market success, and any recourse to countervailing power must be squelched.

[11] The market (suitably reengineered and promoted) can always provide solutions to problems seemingly caused by the market in the first place. This is the ultimate destination of the constructivist orientation within neoliberalism. Any problem, economic or otherwise, has a market solution, given sufficient ingenuity: pollution is abated by the trading of “emissions permits”; inadequate public education is rectified by “vouchers”; auctions can adequately structure exclusionary communication channels;¹⁰⁶ poverty-stricken sick people lacking access to health care can be incentivized to serve as guinea pigs for privatized clinical drug trials; poverty in underdeveloped nations can be ameliorated by “microloans”; terrorism by disgruntled disenfranchised foreigners can be offset by a “futures market in terrorist acts.”¹⁰⁷ Suitably engineered boutique markets were touted as a superior method to solve all sorts of problems previously thought to be better organized by governments: everything from scheduling space shots to regulating the flow through airports and national parks. Economists made money by selling their nominal expertise in setting up these new markets, rarely admitting up front that they were simply acting as middlemen introducing intermediate steps toward future full privatization of the entity in question. Economists also proposed to fix the crisis by instituting new markets, as we shall discover in chapter 5.

The fascinating aspect of all this is how this precept was deployed in what seemed its most unpropitious circumstance, the erstwhile general failure of financial markets in the global economic crisis. One perspective on the issue is to recall that, in the popular Hayekian account, the marketplace is deemed to be a superior information processor, so therefore all human knowledge can be used to its fullest only if it is comprehensively owned and priced. This was deployed in a myriad of ways to suggest what might seem a string of strident non sequiturs: for instance, some neoliberals actually maintained that the solution to perceived problems in derivatives and securitization was redoubled “innovation” in derivatives and securitization, and not their curtailment.¹⁰⁸ Another variant on the Hayekian credo was to insist that the best people to clean up the crisis were the same bankers and financiers who created it in the first place, since they clearly embodied the best understanding of the shape of the crisis. The revolving door between the U.S. Treasury and Goldman Sachs was evidence that the market system worked, and not of ingrained corruption and conflicts of interest.

[12] The neoliberal program ends up vastly expanding incarceration and the carceral sphere in the name of getting the government off our backs. Members of the Mont Pèlerin Society were fond of Benjamin Constant’s adage: “The government, beyond its proper sphere ought not to have any power; within its sphere, it cannot have enough of it.” Although this might seem specious from the perspective of a libertarian, it is central to understanding the fact that neoliberal policies lead to unchecked expansion of the penal sector, as has happened in the United States. As Bernard Harcourt has explained in detail, however much tenet 11 might seem to suggest that crime be treated as just another market process, the NTC has moved from the treatment of crime as exogenously defined within a society by its historical evolution, to a definition of crime as inefficient attempts to circumvent the market. The implication is that intensified state power in the police sphere (and a huge expansion of prisoners incarcerated) is fully complementary with the neoliberal conception of freedom. In the opinion of the MPS member Richard Posner, “The function of criminal sanction in a capitalist market economy, then, is to prevent individuals from bypassing the efficient market.”¹⁰⁹

This precept has some bearing on the unwillingness to pursue criminal prosecution against many of the major players in the global crisis. In this neoliberal perspective, there is also a natural stratification in what classes of law are applicable to different scofflaws: “the criminal law is designed primarily for the nonaffluent; the affluent are kept in line, for the most part, by tort law.”¹¹⁰ In other words, economic competition imposes natural order on the rich, because they have so much to lose. The poor need to be kept in line by a strong state, because they have so little to lose. Hence, the spectacle of (as yet) no major financial figure outside of Bernie Madoff and Raj Rajnarathan going to jail because of the crisis, while thousands of families behind on their mortgages are turfed out into the street by the constabulary, is a direct consequence of this neoliberal precept.

[13] The neoliberals have struggled from the outset to have their political/economic theories do dual service as a moral code. First and foremost, it would appear that the thought collective worshipped at the altar of a deity without restraints: “individual freedom, which it is most appropriate to regard as a moral principle of political action. Like all moral principles, it demands that it be accepted as a value in itself.” However, Hayek in his original address to the first MPS meeting said, “I am convinced that unless the breach between true liberal and religious convictions can be healed, there is no hope for a revival of liberal forces.” The very first MPS meeting reflected that wish, and held a session called “Liberalism and Christianity”; but it revealed only the antagonisms that percolated just below the surface. As a consequence, the neoliberals were often tone-deaf when it came to the transcendental, conflating it with their epistemic doctrines concerning human frailty: “we must preserve that indispensable matrix of the uncontrolled and non-rational which is the only environment wherein reason can grow and operate effectively.”¹¹¹

The more sophisticated neoliberals understood this was rather thin gruel for many of their allies on the right; so from time to time, they sought to link neoliberalism to a specific religion, although they only ventured to do this sotto voce in their in-house publications:

All that we can say is that the values we hold are the product of freedom, that in particular the Christian values had to assert themselves through men who successfully resisted coercion by government, and that it is to the desire to be able to follow one’s own moral convictions that we owe the modern safe­guards of individual freedom. Per­haps we can add to this that only societies which hold moral values essentially similar to our own have survived as free societies, while in others freedom has perished.¹¹²

Other MPS figures such as Buchanan entertained the notion that a certain specific type of moral order would support a neoliberal state, or that morals could reduce the costs of rent-seeking losers throwing monkey wrenches into government.¹¹³ It took a lot of effort, and a fair bit of pussyfooting around the danger of alienating the partisans of one denomination (often in some other part of the world) by coquetting with different denominations or versions of religion, but the project of intellectual accommodation with the religious right and the theocons within the neoliberal framework has been an ongoing project at the MPS, although one fraught with contradictions that have dogged the liberal project since the Enlightenment.¹¹⁴

These thirteen more or less echt-commandments gathered here characterize the rough shape of the program eventually arrived at by the Neoliberal Thought Collective. In this summary, I have sought to highlight the stark divergence from both classical liberalism and libertarianism; further, the individual tenets will also serve as touchstones for our account of the intellectual history of the global economic crisis in subsequent chapters. Yet, having strained to discern unity in what sometimes appears a free-for-all, we should now confront the contrary proposition—that neoliberalism, in some fundamental conceptual sense, does not hang together in actual practice.

Neoliberalism, the Crisis, and the Double Truth Doctrine

All political movements of whatever stripe frequently find themselves in the position of needing to deny something they have affirmed in the past. If politics were the realm of consistency, and consistency the bugaboo of small minds, then zealots would indeed inherit the earth. Acknowledging that, there seems to be nonetheless something a little unusual going on in the Neoliberal Thought Collective, and I think it can be understood, if not entirely justified, by recourse to the doctrine of “double truth.”

Just to be clear about the nature of what will be asserted, I am not referring here to the Platonic doctrine of the “noble lie,” nor the Latin Averroist precepts concerning the tensions between philosophic reason and faith. Neither is it the “doublethink” of Orewellian provenance, which has more to do with the state twisting the meaning of words. It may have some relationship to the thought of Leo Strauss—the hermeneutic awareness that “all philosophers . . . must take into account the political situation of philosophy, that is, what can be said and what must be kept under wraps,” as the Cambridge Companion to Leo Strauss puts it—but exploring the possible Chicago connections between his writings and the neoliberals would be too much of a distraction, given all the other topics we must cover.¹¹⁵ What I shall refer to here is the proposition that an intellectual thought collective might actually concede that, as a corollary of its developed understanding of politics, it would be necessary to maintain an exoteric version of its doctrine for the masses—because that would be safer for the world and more beneficial for ordinary society—but simultaneously hold fast to an esoteric doctrine for a small closed elite, envisioned as the keepers of the flame of the collective’s wisdom. Furthermore, whereas both the exoteric and esoteric versions would deal with many similar themes and issues, the exoteric version might appear on its face to contradict the esoteric version in various particulars. It will be necessary to explore the possibility that these seeming contradictions are not cynical in the modality one often encounters in career politicians, but rather grow organically out of the structural positions that motivate the thought collective.

I don’t think it has gone unnoticed that the NTC embodies a budget of paradoxes, to put it politely. It starts with the strange behavior we already encountered: the neoliberals had begun acknowledging in the 1930s–’50s that they were in pursuit of something “neo,” only to subsequently deny all divergence from an ancient time-honored “liberalism,” against all evidence to the contrary. Subsequently, the continuity story became the exoteric stance, whereas the “neo” remained an esoteric appreciation. But then the dichotomy expands into all manner of seemingly incompatible positions. As Will Davies has put it: market competition should stand as a guarantor of democracy, but not vice versa; unimpeded economic activity would guarantee political freedom, but not vice versa. Yet, curiously, this did not apply to Mont Pèlerin itself.¹¹⁶

The Neoliberal Thought Collective tamed many of the contending contradictory conceptions of the “good society” documented in this volume by trying to have it both ways: to stridently warn of the perils of expanding purview of state activity while simultaneously imagining the strong state of their liking rendered harmless through some instrumentality of “natural” regulation; to posit their “free market” as an effortless generator and conveyor belt of information while simultaneously strenuously and ruthlessly prosecuting a “war of ideas” on the ground; asserting that their program would lead to unfettered economic growth and enhanced human welfare while simultaneously suggesting that no human mind could ever really know any such thing, and therefore that it was illegitimate to justify their program by its consequences; to portray the market as something natural, yet simultaneously in need of solicitous attention to continually reconstruct it; to portray their version of the market as the ne plus ultra of all human institutions, while simultaneously suggesting that the market is in itself insufficient to attain and nourish transeconomic values of a political, social, religious, and cultural character. “Neoliberal writings on allocation shift back and forth between libertarian and utilitarian vocabularies, with the two sometimes appearing interchangeably within a paper or chapter.”¹¹⁷ This ability to vertiginously pivot between paragraphs should itself be considered a political technology of the NTC.

The proliferation of straddles cannot be chalked up to mere pluralism of voices, inadequate critical attention, or absentmindedness. Few political doctrines have undergone the sustained extent of internal criticism of neoliberalism at Mont Pèlerin. All systems sport a modicum of internal contradictions as they age; but these particular discordances appear to betoken some structural problems within the neoliberal program, which have been dealt with in the recent past through application of the double-truth principle. I opt to cover three such contradictions here, which are arguably central to an understanding of the crisis: (1) that a society dedicated to liberal ideals had to resort to illiberal procedures and practices; (2) that a society that held spontaneous order as the ne plus ultra of human civilization had to submit to heavy regimentation and control; and (3) that a society dedicated to rational discourse about a market conceived as a superior information processor ended up praising and promoting ignorance. These, I trust, are stances so incongruous, such howling lapses of intellectual decorum, that one cannot imagine that the protagonists themselves did not take note of them. The historical record reveals that they did.

1. The illiberalism and hierarchical control of the MPS.

Can a liberal political program be conceived and prosecuted by means of open discussion with all comers? Hayek, with his sophisticated appreciation for the sociology of knowledge, thought it should not right from the very beginnings of Mont Pèlerin. In 1946, as he toured the United States attempting to drum up support for his new society, he explicitly stipulated that he was “using the term Academy in its original sense of a closed society [my emphasis] whose members would be bound together by common convictions and try to both develop this common philosophy and to spread its understanding.”¹¹⁸ This evocation of Plato’s Academy was not harmless, as he doubtless understood; it has been the recourse of other MPS members whenever the closed, secret nature of the society has been raised. Hayek managed to have his way in this regard—from the start, recruitment, participation, and membership in the NTC has always been strictly controlled from within—but this starkly raises the issue of whether the MPS could practice what it nominally preached. This objection was immediately raised in 1947 by one of the more famous members of the collective, Karl Popper.

Popper had just published The Open Society and Its Enemies in 1945, attacking Plato, Hegel, and Marx; he was already closely allied with Hayek, who would conspire to bring him to the LSE. Popper notoriously had argued that a regime of open criticism and dispute was the only correct path to political progress; this dovetailed with his influential characterization of science as an ongoing process of conjecture and refutation. Significantly, he pressed this objection upon Hayek almost immediately upon receiving his prospectus for the envisioned organization:

I feel that, for such an academy, it would be advantageous, and even necessary, to secure the participation of some people who are known to be socialists or close to socialism . . . My own position, as you will remember, was always to try for a reconciliation of liberals and socialists . . . This does not, of course, mean that the emphasis on the dangers of socialism (dangers to freedom) should be suppressed or lessened. On the contrary . . . It occurred to me that you might ask me for the names of socialists who might be invited; and I must confess I am at a loss.¹¹⁹

As it happens, due either to lack of “suitable” candidates, or to Hayek’s intransigence on this point, no such diversity of opinion was ever permitted to materialize at the MPS meetings. All discussion was kept within a small circle of political enthusiasm, more often than not held together by what they jointly opposed, rather than some shared Utopia. Popper continued to argue at early MPS meetings against the idea that fruitful discussions of politics required prescreening for ideological homogeneity, or as it was delicately put, “common basic assumptions”; but essentially, he was ignored.¹²⁰ Many other participants, rather, expressed concern that ideological agreement was already not being sufficiently policed; a few, such as Maurice Allais, withdrew due to its perceived dogmatism. As he explained his reservations to Hayek:

The entire issue is to know if the envisioned group wants in the future to coalesce around a rigid dogmatism or if, on the contrary, it wants in its very organization to maintain the principle of liberal thought, of liberal discussion, within the cadre of principles generally accepted by all. Is it a matter of creating a political action group or a society for the defense of private property, or on the contrary, is it a matter of founding a society of thought capable of reexamining without bias all the questions up for debate and of initiating the foundation of a genuine and effective renewal of liberalism?¹²¹

Hayek clearly opted for having both simultaneously, but to make it work, there had to be high barriers to entry, and a putsch or two along the way.¹²² A clash of worldviews on home turf was to be avoided at all costs. For good or for ill, the MPS rapidly evolved into a closed society with a rather stringent ideological litmus test.

This raises the difficult issue of whether the “Open Society” really works the way it was portrayed by Popper, and still sometimes evoked by the NTC when waxing catholic. Many writers have noted in detail how Popper’s vision proved incompatible with that of Hayek; many philosophers of science have rejected Popper’s vision of how science actually works.¹²³ But Popper himself at least glimpsed that his youthful exaltation of tolerance for unlimited criticism was unavailing in many circumstances that resembled those the MPS was constructed to counter. For instance, in a long footnote in Open Society he grants the plausibility of paradoxes of tolerance (“Unlimited tolerance must lead to the disappearance of tolerance”) and democracy (“the majority may decide that a tyrant should rule”), but had little to offer concerning how those paradoxes should be defanged. Yet around the same time, Popper was already flirting with the Hayekian “solution”: membership in the Open Society had to be prescreened to conform to a “minimum philosophy”: but the principles of selection for that philosophy were never made as explicit as they were by Hayek in practice.¹²⁴

Here, I believe, we can witness the birth of one of the trademark “double truth” doctrines of neoliberalism at the MPS. By professing a continuation of classical liberalism to outsiders, neoliberals lauded a tolerant open society that let all positions have a fair hearing and full empirical test. Hayek’s Road is written in this register, with its dedication, “To socialists of all parties.” Divergent views should compete and be criticized from the opposing camp. Everyone, they said, was welcome to participate. Yet there abided a closed subset of MPS insiders who recognized the force of the paradoxes of tolerance and democracy; and consequently they ran their thought collective as an exclusive hierarchical organization, consisting of members preselected for conformity, which encountered opposed conceptions of the world only in highly caricatured versions produced by their own true believers. Esoteric knowledge was transgressive: a liberalism for the twenty-first century could be incubated and sustained only by an irredeemably illiberal organization. Part of the price of admission was initiation into the double truth of the “minimum philosophy”: insiders could learn to live with this esoteric doctrine after a long period of apprenticeship. Outsiders need never know anything about it, and could persist snug in their belief that liberalism meant the tolerant dialogue of the open society; of course, they need never apply to actually enter the MPS.

2. The MPS as regimented controlled society dedicated to the doctrine of “spontaneous order.”

As in the previous case, the internal MPS membership themselves were first to comment on the incongruity of this situation. As the house historian of the MPS reports, Milton Friedman joked in a letter to Hayek, “Our faith requires that we are skeptical of the efficacy, at least in the short run, of organized efforts to promulgate [MPS doctrines].”¹²⁵ The problem, quite clearly, was if the neoliberal portrait of market order was so overwhelmingly superior, then why hadn’t it just naturally come to dominate all other economic forms? Why hadn’t it already summoned the spirit of liberalism that would guarantee it to flourish? Who really needed the shock troops of the Neoliberal Thought Collective? Classical liberals had adopted the consistent position either that it already had or would happen inexorably, so just sit back and enjoy the inexorable trend of history. Neoliberals had rejected all that in favor of an activist stance, but then had to face up to the vexatious intellectual lack of consilience between their sneers at the impudence of the will to planning and their own presumption of the utter nobility of their own will to power. In other words, how could they justify the Audacity of Intervention, or as James Buchanan so cagily posed the question by misrepresenting their own program as classically liberal:

The classical liberal, in the role of social engineer, may, of course, recommend institutional laissez faire as a preferred policy stance. But why, and under what conditions, should members of the citizenry, or of some ultimate political decision authority, accept this advice more readily than that proffered by any other social engineer?¹²⁶

As we have now grown accustomed, there existed more than one engagement with this conundrum within the Neoliberal Thought Collective; however, this fact should be understood as intimately entwined with the double-truth doctrine. Although I expect further research will uncover further variants, I will briefly point to three responses within the MPS.

The first response was that pioneered by Milton Friedman, and, it so happens, James Buchanan. The story here went that modern government was an aberration in the history of civilization, one that continually sought to leverage its massive power into engrossment of even more power, growing like a cancer on the otherwise healthy body of market society. Friedman in particular took the position that if he could explain this in simple and compelling ways to the public, in short sentences and punchy proposals and catchy slogans, they would respond favorably to his image of natural order, and voluntarily accept the political prescriptions offered them by the NTC.¹²⁷ All that was required to offset the wayward course of history was some media coverage of a plucky little David standing up to the governmental Goliath. Friedman was the master of the faux-sympathetic stance, “I just want what you want; but the government never gives it to us. I can.”¹²⁸ He remained faithful to this prescription to a fault, expending prodigious efforts on popular books, a television series, his Newsweek column, and his indefatigable willingness to debate the most diversified opponents on stages all over the world. He even bequeathed his fortune to fund the effort to undermine state-sponsored primary education, since that was where the state had brainwashed the largest number of tender minds. Of course, this notion of expert tutelage constituted the most superficial response that would have occurred to any postwar American economist of whatever stripe, given the presumptive role of the expert during the Cold War era.¹²⁹ In that frame, the people were a featureless lump of clay to be molded by the charismatic expert. Friedman did in fact become the public face of the NTC in America from the 1960s to the 1990s; but his position was pitched too far into Pollyanna territory, and gave too many hostages to “democracy,” to suit the tougher-minded souls in the MPS.

The second, richer and more complex answer was proffered by Hayek. He did strive to maintain that there was a natural telos driving history in the neoliberal direction (although this surfaced only late in his career), but the obstacle to its realization was the treason of the intellectuals. He notoriously dismissed these “second-hand dealers in ideas,” and convened Mont Pèlerin as a countermovement to neutralize them politically in the longer run. This hostility was shared by many other members of the MPS, from Bertrand de Jouvenel to Raymond Aron. However, this set up a dynamic where Hayek eventually felt he had to distinguish between legitimate and fake organizations, or what he called “kosmos” versus “taxis.” The taxis, or constructed order, was usually “simple” and intentionally set up to serve a preconceived set of purposes. The kosmos, or spontaneous order, grew up organically without intended purpose, although it would persist due to the fact that it performed certain unforeseen functions in a superior manner. Participants didn’t need to know or understand the rules of a kosmos to go with the flow, but generally had to be compelled to follow the rules of a taxis. In his usual subtle manner, after defining it, Hayek invested the notion of taxis with negative connotations, and then equated it with institutions of formal government; whereas the kosmos came endowed with all manner of positive connotations, only to imperceptibly turn into his own neoliberal conception of the market.¹³⁰

All this taxonomizing was fine; but the question that was motivating Hayek, even if he never adequately addressed it directly, was: What sort of “order” was the MPS, and what sort of order was the Neoliberal Thought Collective dedicated to bringing about?¹³¹ The provisional answer began by blurring the boundaries of the sharp distinction he had just wrought: “while the rules on which a spontaneous order rests may also be of spontaneous origin, this need not always be the case . . . it is possible that an order which would still have to be described as spontaneous rests on rules which were entirely the result of deliberate design . . . collaboration will always rest both on spontaneous order as well as deliberate organization.”¹³² Here he elided acknowledgment that the MPS and the larger NTC did not themselves qualify as a spontaneous order, if only because it was predicated upon stipulated rules that were not the same for all members; nor were they independent of any common purpose. When you unpacked all the shells of the Russian doll, it was just another elaborate hierarchical political movement.

But perhaps this might be mitigated in the instance it could be regarded as a mongrel amalgam of taxis and kosmos. Certainly, intentional stipulation could potentially have unintended consequences, which meant that almost any phenomenon was a mare’s nest of both kosmos and taxis elements; but Hayek decided he could not condone such promiscuity:

[I]t is impossible, not only to replace spontaneous orders by organization and at the same time to utilize as much of the dispersed knowledge of all its members as possible, but also to improve or correct this order by interfering in it by direct commands. Such a combination of spontaneous order and organization it can never be rational to adopt.¹³³

Since Hayek’s original point had been that no one “rationally” adopts a kosmos, here was where his construct broke down. Either the dividing line between kosmos and taxis was bright and clear, and the MPS was an example of a taxis, which was thus illegitimate by his own lights, or else kosmos and taxis were hopelessly intertwined, but then there was no dependable way in his system to separate “government” from “market,” and the politics of the NTC would threaten to become unintelligible. The Hayekian wing of the thought collective has never been able to square this circle, so it has to resort to double-truth tactics. For outsiders, neoliberal thinkers are portrayed as plucky individual rebel blooms of rage against the machine, arrayed against all the forces of big government and special interests, and in a few hyperbolic instances, even against the “capitalists.”¹³⁴ They are neither sown nor cultivated, but are like unto dandelions after a spring rain, pure expressions of the kosmos. But once initiated into the mysteries of the thought collective, only the organization men rise to the top, and they know it. The Richard Finks, Leonard Reads, and Antony Fishers of the world are the true movers and shakers of the neoliberal movement, not some blogger in a basement. Salarymen are the purest expression of taxis, but must not say so.

In my opinion, the most perceptive and honest attempt to address the straddle between spontaneous order and calculated politics was the legacy of a rather less-cited MPS member (although another winner of the Bank of Sweden Prize), George Stigler. The oral tradition at Chicago had long acknowledged that Stigler’s approach to the ultimate purpose of economics was different from that of the others:

MILTON FRIEDMAN: There’s no problem [between their respective approaches]. It’s true, that George wanted to change things.

AARON DIRECTOR: But he preferred to study them, not to change them.

MF: He preferred to say that he preferred to study them . . . It was partly a long-running difference between him and me . . . And he liked to stress, “I just want to understand the world and Milton wants to change it.”¹³⁵

Stigler’s self-denying ordinance was not, however, the conventional instance of the reticence and humility of the temperate scholar. He was directly responding to the contradiction lodged in the NTC identified in this section. Stigler understood that the Audacity of Intervention was a consequence of an asymmetry in the neoliberal theory of politics:

As I mentally review Milton’s work, I recall no important occasion on which he has told businessmen how to behave. . . . Yet Milton has shown no comparable reticence in advising Congress and the public on monetary policy, tariffs, schooling, minimum wages, the tax benefits of establishing a ménage without benefit of clergy, and several other subjects. . . . Why should businessmen—and customers and lenders and other economic agents—know and foster their own interests, but voters and political coalitions be so much in need of his and our lucid and enlightened instruction?¹³⁶

Stigler was a true believer in the marketplace of ideas, a neoliberal notion if ever there was one. The public buys the information it wants, and adopts political positions based upon optimal ignorance.¹³⁷ For Stigler, there was no necessary historical trend or telos toward the neoliberal market. In his books, Friedman’s (and Buchanan’s) quest to educate and edify the unwashed was a miserable waste of time and resources, if one were to believe the neoliberal characterization of the market, and of politics as a market phenomenon. But then, what was the putative function of the Neoliberal Thought Collective? Stigler’s answer was profound: it was to capture the minds of the crucial elites by innovating new economic and political doctrines that those elites would recognize as being in their interest once they were introduced to them (presumably by the outer shells of the neoliberal Russian doll). The MPS was that most noble protagonist, an intellectual entrepreneur; it came up with products before the clientele even knew they wanted them; and what it sold were the tools for those poised to infiltrate the government and immunize policy from the optimally stupid electorate. Technocratic elites could intently maintain the fiction that “the people” had their say, while reconfiguring government functions in a neoliberal direction. These elite saboteurs would bring about the neoliberal market society far more completely and efficaciously than waiting for the fickle public to come around to their beliefs.¹³⁸ Friedman and Buchanan had sailed too close to the wind in not holding democracy in sufficient contempt; what the neoliberal program counseled was a coup, not a New England town-hall meeting. Stigler did want to change the world, but in a manner more Machiavellian than his peers.¹³⁹ His was the instruction manual for neoliberals to occupy government, not merely disparage it.

I think that Stigler’s construction of the meaning and purpose of the Neoliberal Thought Collective was the version that won out after the 1980s, in part because it openly embraced the double-truth doctrine, rather than uneasily squirming around it, as Friedman had done. The MPS offered its elite recruits one thing, and the outer shells of the Russian doll another. The exoteric knowledge of the spontaneous order of the market was good enough for Fox News and The Wall Street Journal; the esoteric doctrine of reengineering government to recast society comprised the marching orders of the NTC. Friedman was the public face, Stigler the clan fixer. For the former, the MPS was just another debating society; for the latter, it was the executive committee of the capitalist insurgency.

3. The MPS as a Society of Rationalists promoting ignorance as a virtue.

Many observers have seen fit to comment that the MPS was not a very open society, in the Popperian sense, and that its regimented character may have appeared a bit incongruous given its professed beliefs; but in my opinion, most analysts have fallen down when it comes to this third straddle¹⁴⁰. That is a shame, because it will transpire that this particular “double truth” is far and away the most important of the three for understanding how the NTC managed to come through the crisis relatively unscathed.

Hayek is noteworthy in that he placed ignorance at the very center of his political theory: “the case for individual freedom rests chiefly on the recognition of the inevitable ignorance of us all.”¹⁴¹ Most commentators tend to interpret this as an appeal to ignorance as some kind of primal state of mankind; but I think they need to expand their horizons. The distinction begins to bite when we take note that Hayek harbored a relatively low opinion of the role of education and discussion in the process of learning, and notoriously, an even lower opinion of the powers of ratiocination of those he disparaged as “the intellectuals.” These, of course, were the mirror image of his belief in the market as a superior information processor:

Nor is the process of forming majority opinion entirely, or even chiefly, a matter of discussion, as the overintellectualized conception would have it . . . Though discussion is essential, it is not the main process by which people learn. Their views and desires are formed by individuals acting according to their own designs . . . It is because we normally do not know who knows best that we leave the decision to a process we do not control.¹⁴²

For Hayek and other advocates of “emergent” social cognition, true rational thought is impersonal, but can occur only between and beyond the individual agents who putatively do the thinking. As he wrote in The Constitution of Liberty, “to act rationally we often find it necessary to be guided by habit rather than reflection.” As Christian Arnsperger so aptly put it, for Hayek, “rational judgment can only be uttered by a Great Nobody.”¹⁴³ That may seem odd in someone superficially tagged as a methodological individualist supporter of freedom; but it just goes to show how far ignorance has become ingrained in American political discourse. The trick lies in comprehending how Hayek could harbor such a jaundiced view of the average individual, while simultaneously elevating “knowledge” to pride of place in the economic pantheon:

Probably it is true enough that the great majority are rarely capable of thinking independently, that on most questions they accept views which they find ready-made, and that they will be equally content if born or coaxed into one set of beliefs or another. In any society freedom of thought will probably be of direct significance only for a small minority.¹⁴⁴

For Hayek, “Knowledge is perhaps the chief good that can be had at a price,” but difficult to engross and accumulate, because it “never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess.” You might think this would easily be handled by delegating its collection and winnowing to some middlemen, say to academic experts, but you would be mistaken, according to Hayek. He takes the position that all human personal abilities to evaluate the commodity are weak, at best. And this is not a matter of differential capacities or distributions of innate intelligence: “the difference between the knowledge that the wisest and that which the most ignorant individual can deliberately employ is comparatively insignificant.” Experts are roundly disparaged by Hayek, and accused of essentially serving as little more than apologists for whomever employs them.¹⁴⁵ On the face of it, it thus seems somewhat ironic that Hayek would be touted as the premier theorist of the New Knowledge Economy. But the irony dissolves once we realize that central to neoliberalism is a core conviction that the market really does know better than any one of us what is good for ourselves and for society, and that includes the optimal allocation of ignorance within the populace: “There is not much reason to believe that, if at any one time the best knowledge which some possess were made available to all, the result would be a much better society. Knowledge and ignorance are relative concepts.”¹⁴⁶

What purportedly rescues Hayek’s system from descending into some relativist quagmire is the precept that the market does the thinking for us that we cannot. The real danger to humanity resides in the character who mistakenly believes he can think for himself:

It was men’s submission to the impersonal forces of the market that in the past has made possible the growth of civilization . . . It does not matter whether men in the past did submit from beliefs which some now regard as superstition . . . The refusal to yield to forces which we neither understand nor can recognize as the conscious decisions of an intelligent being is the product of an incomplete and therefore erroneous rationalism. It is incomplete because it fails to comprehend that co-ordination of the multifarious individual efforts in a complex society must take account of facts no individual can completely survey. And it also fails to see that . . . the only alternative to submission to the impersonal and seemingly irrational forces of the market is submission to an equally uncontrollable and therefore arbitrary power of other men.¹⁴⁷

There you have Hobson’s choice: either the abject embrace of ignorance or abject capitulation to slavery. The Third Way of the nurturing and promotion of individual wisdom is for Hayek a sorry illusion.¹⁴⁸ The Market works because it fosters cooperation without dialogue; it works because the values it promotes are noncognitive. The job of education for neoliberals like Hayek is not so much to convey knowledge per se as it is to foster passive acceptance in the hoi polloi toward the infinite wisdom of the Market: “general education is not solely, and perhaps not even mainly, a matter of the communication of knowledge. There is a need for certain common standards of values.” Interestingly, science is explicitly treated in the same fashion: if you were to become an apprentice scientist, you would learn deference and the correct attitudes toward the enterprise, rather than facts and theories. Of course, Hayek rarely capitalizes or anthropomorphizes the Market, preferring to refer instead to euphemistic concepts like “higher, supraindividual wisdom” of “the products of spontaneous social growth.” Formal political processes where citizens hash out their differences and try to convince one another are uniformly deemed inferior to these “spontaneous processes,” wherein, it must be noted, insight seems to descend out of the aether to inhabit individual brains like the tongues of the Holy Ghost: this constitutes one major source of the neoliberal hostility to democratic governments. But the quasi-economistic language testifies that the nature of the epiphany is not otherworldly but more mundane and pecuniary: “civilization begins when the individual in pursuit of his ends can make use of more knowledge than he himself has acquired and when he can transcend the boundaries of his ignorance by profiting from knowledge that he does not himself possess.”¹⁴⁹

This language of “use and profit from knowledge you don’t actually possess” might seem a bit mysterious until we unpack its implications for ignorance as a status to be produced rather than a state to be mitigated. I second the analysis of Louis Schneider that Hayek should be read as one of a long line of social theorists who praise the unanticipated and unintended consequences of social action as promoting the public interest, but who take it one crucial step further by insisting upon the indispensable role of ignorance in guaranteeing that the greater good is served.¹⁵⁰ For Hayek, the conscious attempt to conceive of the nature of public interest is the ultimate hubris, and to concoct stratagems to achieve it is to fall into Original Sin. True organic solidarity can obtain only when everyone believes (correctly or not) they are just following their own selfish idiosyncratic ends, or perhaps don’t have any clear idea whatsoever of what they are doing, when in fact they are busily (re)producing beneficent evolutionary regularities beyond their ken and imagination. Thus, ignorance helps promote social order, or as he said, “knowledge and ignorance are relative concepts.”

The major point to be savored here is that individual ignorance fostered and manufactured by corporations, think tanks and other market actors is suitably subservient to market rationality, in the sense that it “profits from the knowledge that the agent does not possess.” Paid experts should behave as apologists for the interests that hire them: this is the very quiddity of the theory of self-interest. As Schneider explains, “Organic theorists hold that while actors may cojointly achieve important ‘beneficent’ results, they do so in considerable ignorance and in ignorance of the socially transmitted behavior they are reproducing contains accumulations of ‘knowledge’ now forgotten or no longer perceived as knowledge.”¹⁵¹ Burkean conservatism revels in the preservation of tradition, the great unconscious disembodied wisdom of the ages. This is why cries of “teach the controversy” in the schoolroom, “sound science” in the courtroom, and stipulations of “balance” in the news media are sweet music to neoliberal ears. That is why, as we shall repeatedly observe in subsequent chapters, and especially chapter 6, neoliberals and economists have served to sow confusion and falsehoods about the causes and consequences of the crisis. Neoliberals strive to preserve and promote doubt and ignorance, in science as well as in daily life; evolution and the market will take the hindmost.

The second salient implication is that, from the neoliberal vantage point, “science” does not need special protection from the ignorant, be they the partisan government bureaucrat, the craven intellectual for hire, the lumpen MBA, the Bible-thumping fundamentalist, the global-cooling enthusiast, or the feckless student. In an ideal state, special institutions dedicated to the protection and pursuit of knowledge can more or less be dispensed with as superfluous; universities in particular must be weaned away from the state and put on a commercial footing, dissolving their distinctive identities as “ivory towers.” Science should essentially dissolve into other market activities, with even its “public” face held accountable to considerations of efficiency, profitability, and subservience to personal ratification. “Competition” is said to ensure the proliferation of multiple concepts and theories with the blessing of the private sector. The only thing that keeps us from enjoying this ideal state is the mistaken impression that science serves higher causes, or that it is even possible to speak truth to power, or that one can rationally plan social goals and their attainment.¹⁵² Despairing of extirpation of these doctrines from within the university in his lifetime, Hayek and his confederates formed the Mont Pèlerin Society and then forged a linked concentric shell of think tanks to proselytize for the neoliberal idea that knowledge must be rendered subordinate to the market. Little did he suspect just how successful his crusade would be after his death.

Hayek is sometimes portrayed as a postmodern figure who did not believe in Truth; but again, I don’t think that really gets to the heart of the matter. Equally misguided would be the interpretation that Hayek would only promote the production of instrumentally useful knowledge: “Science for science’s sake, art for art’s sake, are equally abhorrent to the Nazis, our socialist intellectuals, and the communists. Every activity must derive its justification from a conscious social purpose.”¹⁵³ Instead, I believe he initiated an important neoliberal practice as advocating a double-truth doctrine: one for the masses, where nominally everything goes and spontaneous innovation reigns; and a different one for his small, tight-knit cadre of believers. First and foremost, neoliberalism masquerades as a radically populist philosophy, one that begins with a set of philosophical theses about knowledge and its relationship to society. It seems at first to be a radical leveling philosophy, denigrating expertise and elite pretentions to hard-won knowledge, instead praising the “wisdom of crowds.” The Malcolm Gladwells, Jimmy Waleses, and James Surowieckis of the world are its pied pipers. This movement appeals to the vanity of every self-absorbed narcissist, who would be glad to ridicule intellectuals as “professional secondhand dealers in ideas.”¹⁵⁴ But of course it sports a predisposition to disparage intellectuals, since “knowledge and ignorance are relative concepts.” In Hayekian language, it elevates a “kosmos”—a supposedly spontaneous order that no one has intentionally designed or structured because they are ignorant—over a “taxis.”

Sometimes people are poleaxed by some of the astounding things neoliberals have said (in public, in the media) about the crisis: that it was all the fault of Freddie Mac and Fannie Mae, that China made us do it, that it all was due to a “deficiency of economic literacy” on the part of the lower classes, that investors rationally factored in the threat of the Obama administration taking office by going on an investment strike from 2008 to 2010, that the greatest contraction since the Great Depression is solely to be laid at the door of government debt—and I am not making these up; they will be documented herein. How could people of moderate intelligence and goodwill say and write such things? Here the double-truth doctrine bites hard. The major ambition of the Neoliberal Thought Collective is to sow doubt and ignorance among the populace. This is not done out of sheer cussedness; it is a political tactic, a means to a larger end. Chapter 6 makes the argument: Think of the documented existence of climate-change denial; and then simply shift it over into economics. Of course, they can’t seriously admit it in public; but years of evidence since 2007 and the esoteric theory of ignorance recounted above unite to buttress the case that this has been one of the main tactics by which the NTC has escaped all obloquy for the crisis. The double truth is: as an insider, you realize that this is a good thing, since it fosters defeat of political opponents, the health of the kosmos, and the victory of the neoliberal market society.

Learning from Carl Schmitt

Perhaps the greatest incongruity of the Neoliberal Thought Collective has been that the avatars of freedom drew one of their most telling innovations from the critique of liberalism that had been mounted by totalitarian German and Italian political thinkers from the interwar period. Although there were a fair number of such writers who were important for the European MPS members, the one that comes up time and again in their footnotes is Carl Schmitt, whom Hayek called “Adolf Hitler’s crown jurist Carl Schmitt, who consistently advocated the replacement of the ‘normative’ thinking of liberal law by a conception of law which regards as its purpose ‘concrete order formation’”; another was Bruno Leoni, who posited law as something best fortified as resistant to all popular alteration. It is a watchword among those familiar with the German literature that Hayek reprises much of Schmitt’s thesis that liberalism and democracy should be regarded as antithetical under certain circumstances¹⁵⁵:

Liberalism and democracy, although compatible, are not the same . . . the opposite of liberalism is totalitarianism, while the opposite of democracy is authoritarianism. In consequence, it is at least possible in principle that a democratic government may be totalitarian and that an authoritarian government may act on liberal principles . . . [in] demanding unlimited power of the majority, [democracies] become essentially anti-liberal.¹⁵⁶

Since the epistemic innovations covered above informed the MPS thought collective that the masses will never understand the true architecture of social order, and intellectuals will continue to tempt them to intervene and otherwise muck up the market, then they felt impelled to propound the central tenet of neoliberalism, viz., that a strong state was necessary to neutralize what he considered to be the pathologies of democracy. The notion of freedom as exercise of personal participation in political decisions was roundly denounced.¹⁵⁷ Hayek insisted that his central epistemic doctrines about knowledge dictated that freedom must feel elusive for the common man: “Man in a complex society can have no choice but between adjusting himself to what to him must seem the blind forces of the social process and obeying the orders of a superior.”¹⁵⁸ Paraphrasing Walter Benjamin, citizens must learn to forget about their “rights” and instead be given the opportunity to express themselves through the greatest information conveyance device known to mankind, the market.¹⁵⁹ The Neoliberal Thought Collective, through the instrumentality of the strong state, sought to define and institute the types of markets that they (and not the citizenry) were convinced were the most advanced. Hayek’s frequent appeals to a “spontaneous order” often masked the fact that it was the NTC who were claiming the power to exercise the Schmittian “exception” (and hence constitute the sovereignty of the state) by defining things like property rights, the extent of the franchise, constitutional provisions that limit citizen initiatives, and the like. As Scheuerman writes about the comparison with Hayek, “For Carl Schmitt, the real question is who intervenes, and whose interests are to be served by intervention.”¹⁶⁰

In too many ways to enumerate here, the reaction of both economists and the NTC to the global economic crisis is a case study in the applications of Schmitt’s doctrine of the exception. All the rationalizations of the Federal Reserve “staying within its legal mandate” went out the window the minute it started to block market verdicts on which banks should fail; the American government followed by deciding which auto firms and insurance companies would live or die; the imperious negation of market diktat continued apace with a stream of further arbitrary decisions. Governors in Michigan began to oust legitimately elected local officials, and replace them with unelected “emergency managers”; mortgage firms set about to ignore long-standing legal restrictions on conveyance and foreclosure. Similar things began to happen within the European Union, with the imposition of unelected prime ministers in Greece and Italy, and the suspension of competition guidelines at the Brussels level. As Will Davies so perceptively noted, “In answer to the question of whether neoliberalism is alive or dead, it seems entirely plausible to speak of an ongoing or permanent state of exception.”¹⁶¹ The NTC has demonstrated that true political power resides in the ability to make the decision to “suspend” the market in order to save the market.

As in so many other areas, they were merely echoing Schmitt’s position that “Only a strong state can preserve and enhance a free-market economy” and “Only a strong state can generate genuine decentralization, [and] bring about free and autonomous domains.” This was echoed (without attribution) by Hayek: “If we proceeded on the assumption that only the exercises of freedom that the majority will practice are important, we would be certain to create a stagnant society with all the characteristics of unfreedom.”¹⁶²

One can therefore only second the verdict of Christi that, “In truth, Hayek owed much to Schmitt, more than he cared to recognize.”¹⁶³ For Hayek and the neoliberals, the Führer was replaced by the figure of the entrepreneur, the embodiment of the will-to-power for the community, who must be permitted to act without being brought to rational account. While he probably believed he was personally defending liberalism from Schmitt’s withering critique, his own political “solution” ended up resembling Schmitt’s “total state” more than he could bring himself to admit. If it had been apparent to his audience that he was effectively advocating an authoritarian reactionary despotism as a replacement for classical liberalism, it would certainly have not gone down smoothly in the West right after World War II. Further, there was no immediate prospect of a strong authority taking over the American university system (by contrast with Germany in the 1930s) and sweeping the stables clean. In an interesting development not anticipated by Schmitt, Hayek and his comrades hit upon the brilliant notion of developing the “double truth” doctrine of neoliberalism—namely, an elite would be tutored to understand the deliciously transgressive Schmittian necessity of repressing democracy, while the masses would be regaled with ripping tales of “rolling back the nanny state” and being set “free to choose”—by convening a closed Leninist organization of counterintellectuals. There would be no waiting around until some charismatic savior magically appeared to deliver the Word of Natural Order down from the Mont to the awestruck literati. Intellectual credibility could not be left to the vagaries of “spontaneous order.” The constellation of double-truth doctrines enumerated in this chapter are the direct consequence of Schmitt’s definition of politics as the logic of the friend/enemy distinction.

This was sometimes admitted by members of Mont Pèlerin in public, but only when they felt that their program was safely in the ascendant:

Let’s be clear, I don’t believe in democracy in one sense. You don’t believe in democracy. Nobody believes in democracy. You will find it hard to find anybody who will say that if, that is democracy interpreted as majority rule. You will find it hard to find anybody who will say that at 55% of the people believe the other 45% of the people should be shot. That’s an appropriate exercise of democracy . . . What I believe is not a democracy but an individual freedom in a society in which individuals cooperate with one another.¹⁶⁴

Christian Arnsperger has captured the double-truth doctrine nicely, by insisting that Hayek had denied to others the very thing that gave his own life meaning: the imprimatur to theorize about “society” as a whole, to personally claim to understand the meaning and purpose of human evolution, and the capacity to impose his vision upon them through a political project verging upon totalitarianism. It was, as Arnsperger puts it, a theory to end all theories; not so different from the “end of history” scenarios so beloved of his epigones. The doctrine of special dispensation for the Elect is one very powerful source of ongoing attractions of neoliberalism, viz., the feeling of having surrendered to the wisdom of the market by coming to know something most of the nattering crowd can’t possibly glimpse: freedom itself must be as unequally distributed as the riches of the marketplace.¹⁶⁵

Of course, any embittered autodidact in his darkened room is “free” to believe that he deserves the same intellectual dispensation as the one eventually granted to Hayek. The world is full of minor Raskolnikovs with their contempt and disdain for the ignorant herd. But therein lies the critical difference, which is the most important fact for understanding neoliberalism: the NTC had been working assiduously to support his (and their) special vision for decades before his own dispensation came to be taken seriously by the larger culture, as demonstrated in Figure 2.4 in tabulated mentions of Hayek in the press and British Parliament.¹⁶⁶ There was always the danger that the masses he had so haughtily disdained would have returned the favor and consigned him to oblivion. The double-truth doctrines we have summarized here did not readily lend themselves to popularization or general acceptance in the postwar milieu. But tremendous effort, team tenacity, and a very timely Nobel Prize revived his prospects.¹⁶⁷ And now, if there was ever a figure who received an intellectual boost from the crisis, it would be difficult for them to claim parity with the revival of Friedrich Hayek

Figure 2.4: Mentions of Friedrich Hayek in Various English-Language Sources, 1931–1991

Source: Gilles Cristophe, University of Lille I

In the aftermath of the crisis, Hayek is now treated as a seer of prodigious perspicuity; and at the exhortation of Glenn Beck, his Road to Serfdom has been read (or maybe just scanned) by thousands who will never be bothered to delve much deeper into neoliberalism, or come to comprehend the political project that they feel speaks to them. But then again, it may be because the actual dry and stilted Hayekian encyclicals have less to do with all that than the fact that neoliberal images now so pervade cultural discourse that the situation has far transcended explicit political theory.¹⁶⁸

In the next chapter, we leave the scriptures behind, to begin to contemplate everyday neoliberalism.