ineteconomics | The roots of the neoliberal perspective sprung from a world shattered by the collapse of empires and the chaos produced by the first World War. Austrian economists and business advocates in the 1920s and ‘30s, like Ludwig von Mises and Friedrich Hayek, working at the time in the Vienna Chamber of Commerce, worried about how a rump nation like Austria could get along in the new global landscape. The specter of socialism and communism in Hungary, part of the old Habsburg Empire, which briefly went red in 1919, added to their anxiety. They were also afraid of rising nation-states calling the shots on economic matters by doing things like raising tariffs – especially nations governed by democracies that recognized the interests of regular people. The spread of universal male voting rights set off alarm bells that power was shifting.
How could capitalists survive without a vast network of colonies to rely on for resources? How could they protect themselves from continuing interference in business and seizures of private property? How might they resist increasing democratic demands for more broadly shared economic resources?
These were big questions, and neoliberal answers reflected their fears. From their viewpoint, the political world looked frightening and uncertain – a place where the masses were constantly agitating to disrupt the realm of private enterprise by forming labor unions, conducting protests, and making demands to reallocate resources.
What neoliberals wanted was a sacred space free from such turmoil – a transcendent world economy where capital and goods could flow without restraint. They imagined a place where capitalists were secure from democratic processes and protected by carefully constructed institutions and laws — and by force, if necessary. Neoliberals weren’t fully opposed to democracies as long as they could be constrained to provide a safe haven for capitalists, but if they didn’t, many thought that authoritarianism would do just fine, too.
These early stirrings of neoliberalism were thus a kind of theology, a utopian longing for an abstract, invisible world of numbers that humans could not spoil. In this promised land, talk of social justice and economic plans to enhance the public good was heresy. “Society” was a realm which, at best, should be kept strictly separate from the economy. At worst, it was the enemy of the global economy — the troublesome domain of nonmarket values and popular concerns that got in the way of capitalist transcendence.
After World War II, the neoliberals organized formally as the Mount Pelerin Society, in which key figures like Hayek pushed the vision of a “competitive order” where competition among producers, employers, and consumers would keep the global economy humming along smoothly and protect everybody from abuse (quite an idea, that). Protections like social insurance and regulatory frameworks were unnecessary.
Basically, the market was God, and people were here to serve it – not the other way around.
For neoliberals, the twentieth century wasn’t about the Cold War, which didn’t much interest them. It was about fighting against things like Franklin Roosevelt’s New Deal and what they considered dangerous totalitarian schemes of economic equality. As historian Quinn Slobodian put it in his book Globalists: The End of Empire and the Birth of Neoliberalism, they set their sights on the “development of a planet linked by money, information, and goods where the signature achievement of the century was not an international community, a global civil society, or the deepening of democracy, but an ever-integrating object called the world economy and the institutions designated to encase it.”
Neoliberals dedicated themselves to protecting unrestricted global trade, crushing labor unions, deregulating business, and usurping government’s role in providing for the common good with privatization and austerity. While it’s true that most Western governments, as well as powerful global institutions like the World Bank and International Monetary Fund, are deeply influenced by neoliberalism today, it really wasn’t until the 2007-8 Global Financial Crisis that most people had even heard of the movement.
That’s because, for a long time, neoliberalism invaded our lives like a stealth virus.
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