For five decades, neoliberalism’s ascent in economics and social planning has been relentless. By neoliberalism, I mean the idea that markets should be as unregulated as possible, the government should be reduced to a minimum, that taxes should be cut to a minimum. The idea is that markets can naturally regulate, that the rich will invest the wealth wisely, that good jobs will be created, and we will achieve social and economic equilibrium with little government interference.
A major turning point for making neoliberal ideas mainstream was the September 13, 1970 New York Times’ publication of Milton Friedman’s article, “The Social Responsibility Of Business Is to Increase Its Profits,” now often referred to as “The Friedman Doctrine.” On the 50th anniversary of its publication, the New York Times ran a series of reflection pieces on it.
Not surprisingly, foundational ideas are important, so I tend to date neoliberalism with Friedman’s article. The first places those ideas were implemented were the Global South through International Monetary Fund and World Bank policies, and US foreign policy. The overthrow and assassination of Salvador Allende in Chile in September 1973 is another marker of the implementation of neoliberal policies. Friedman was in part arguing against the recommendation of the prominent Swedish economist Gunnar Myrdal for a program for the Global South, in response to decolonization, that would have been like the post-WWII Marshall Plan that rebuilt Western Europe and Japan. Friedman was Myrdal’s nemesis. Indeed, Myrdal protested Friedman getting the Nobel Prize in Economics in 1976.
Friedman popularized and legitimated neoliberal economic ideas and validated their ascendance in the policies of Margaret Thatcher, who became prime minister of the UK in 1979, and Ronald Reagan who was elected in Nov. 1980, and here in Canada, Mulroney in 1984.
Liz Truss and her chancellor Kwasi Kwarteng believed a sophomoric variation of this idea of neoliberalism, the diluted version retailed to voters to get them to vote for governments that will cut taxes and regulations, even if it erodes the common good in areas like education, health care, labour rights, transportation infrastructure, and the environment. People are encouraged to vote against their short-time interest on the promise that the wealthy will deliver their needs through the market in the long-run.
Truss and Kwarteng, like voters, did not read the fine print that after a 50-year experiment, the short-term costs have not produced long-term benefits to the majority. Quite the opposite. Thatcher and Reagan implemented neoliberal policies in the 1980s; Tony Blair and Bill Clinton reinforced them in the 1990s. Better economic performance and enhanced social equilibrium would be the result. People just needed to be patient.
Instead, it delivered a dystopic economy with dangerously accelerating concentrations of wealth, flat wages for a half century, a declining middle class, a shortage in affordable housing, unaffordable higher education, and a global environmental crisis.
In delivering a tax cut and austerity to Britain, Truss and Kwarteng forced the neoliberal markets to blurt out the truth that these policies don’t actually work. Neoliberalism is a kind of pyramid scheme to strip wealth. It has been sustained by complaining about government and taxes, while keeping government and taxes in place to keep the system functioning for wealth transfers to the rich.
Truss and Kwarteng’s extreme servitude to neoliberal ideology exposed its lie. Not only would it not deliver equilibrium in the economy and society, their plan would speed us even faster into a dystopic future.
Neoliberal ideology is bankrupt. The neoliberal market delivered that message on its own to Liz Truss and the world. To paraphrase Maya Angelou ‘When the neoliberal market shows you what it is, believe it the first time.’
This moment has been too long in coming. The 50-year neoliberal experiment has generated too many negative results. Ethics demand that this experiment end and course correction begin immediately.
Elizabeth Mancke is the Canada Research Chair in Atlantic Canada Studies at the University of New Brunswick.