Saturday, April 12, 2014

Masters of the Universe: An Alternative History of the Rise of Economism?

A colleague kindly referred me to this book review—

--of Masters of the Universe by the British barrister and historian Daniel Stedman Jones. (Both the review by Michael Clune of the Los Angeles Review of Books, and Stedman Jones’s book, refer to what I call ‘economism” as neoliberalism, so I will use “N” for short to refer to that terminology.)

Stedman Jones’s book can be read simply as another historical treatment of the rise of N during the era 1940-1980, in both the US and the UK, and as such it seems a reasonable and thoughtful volume. However, according to both the author and the reviewer, the agenda is more ambitious. Stedman Jones wishes to argue as to the inadequacies and indeed errors of other works, notably David Harvey’s A Short History of Neoliberalism, which some of my historian and social science colleagues treat as a standard reference on the subject, and Naomi Klein’s Shock Doctrine, upon which I relied considerably in writing THE GOLDEN CALF. So it naturally interested me to see how well Stedman Jones could defend his case as to the errors of those other authors.

Before that, what does Stedman Jones have to say? Very briefly, he argues that the route from N as a fringe philosophy held by a small number of thinkers in the late 1940s, to its triumph under Thatcher and Reagan in the 1980s, was not at all the slam-dunk that right-leaning thinkers now believe, nor was it the result of an organized conspiracy among capitalists as he thinks that Harvey argues. It was a long, slow slog that could easily have turned out differently. Stedman Jones places a lot of weight on what happened in the 1970s with economic doldrums and “stagflation,” which discredited in many politicians’ minds the long-standing Keynesian orthodoxy. First it’s important to note that just as Freud’s reputation was trashed at the hands of many Freudians, among the worst enemy of Keynes’s reputation were the Keynesians. While Keynes himself was quite cautious as to the ability of economics to predict and control events precisely, his followers grew fat and sassy and promised much more than their theories could deliver. Hence they were easy to discredit when supposedly Keynesian remedies failed to restore economic prosperity during those years.

Enter monetarism—Milton Friedman’s own theory of what to do in difficult economic times. The review stresses that monetarism and today’s N are quite different species of animal; N rejects government interference with the economy while monetarism is a method of government interference in the economy. Accordingly, the left-center governments in power in the UK and US in the late 1970s thought they could adopt monetarist policies without buying whole hog into anything like N. But because of both the economic doldrums and other events such as the Iran hostage crisis, these folks were then voted out of office and replaced by more extreme ideologues who bought the whole N deal—even though by today’s standards Reagan’s brand of N was considerably more moderate than the going ideology, and usually has to be spruced up with some revisionist history so that today’s N devotees can properly worship Reagan.

OK, so that’s the history, and knowing more about its ins and outs is certainly valuable. What about the criticisms of Harvey and Klein?

Harvey’s besetting sin, according to both Stedman Jones and Clune, is apparently being a Marxist, or at any rate what they consider to be a Marxist, which presumably translates into soft-headed. Looking into the details as to exactly how this invalidates Harvey’s historical writings, Clune offers the observation that Harvey apparently believes in a Marxist theory of labor that has long been discredited. I cannot recall, in my reading of his history, that whether he believed that theory or not made much difference for most of the book.

More to the point, Stedman Jones apparently wishes to attribute to Harvey’s Marxism, and not to a correct reading of history, the role that capitalists played in the rise of N. Stedman Jones’s account, as one would expect, is big on the role of N think tanks. And being a decent historian, Stedman Jones relates just who footed the bills for all those think tanks. And it was not the poor. So it’s not clear to me how Stedman Jones can on the one hand admit the crucial role of many capitalists, presumably following their own self-interest, to fund these N think tanks, and then turn around and say that capitalists had nothing to do with N’s eventual triumph.

What about Klein’s theory of the shock doctrine, which she attributes to Milton Friedman and his followers in the Chicago School of Economics? Well, Klein’s idea, as I understood it, was that the so-called “Chicago Boys” saw their opening whenever a nation suffered a crisis. They then showed up with their monetarist policies as a way to get the fiscal crisis under control. At first the offering seemed modest—a nation could adopt these monetarist policies without having to abandon whatever other political policies they wished to espouse. But then as soon as the technocrats took over, they used their opening to institute a wide range of “reforms” that completely instituted an N program, and that effectively repealed all the existing policies, especially any that favored organized labor. I don’t see much difference between such a program and what Stedman Jones says actually occurred under Thatcher and Reagan. Certainly one could quibble about details but the outline seems valid.

In short, Stedman Jones’s attempt to separate his own book from previous work seems more of a marketing ploy than a sober assessment of what he actually has on offer—and what he has on offer seems to be useful in its own right, and not in need of any such trumpeting.
Daniel Stedman Jones, Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics. Princeton University Press, 2012.

No comments:

Post a Comment