Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown

"The book is about the financial crisis, but it’s also a history of neoliberalism and how these two connect together. One starting point for neoliberalism is Friedrich Hayek founding the Mont Pelerin society (Mont Pelerin was a small Alpine ski resort). It was founded in the 1940s and the idea was to get together thinkers—economists but broader thinkers as well—who wanted to talk about and, in a way, save liberalism from the tide of socialism. This was the time of these calculation debates and which was going to be better, capitalism or socialism? There was also Keynesianism, the idea that the government should be intervening in the economy. So these guys wanted to get together and really set up an intellectual counterweight to all that. That was the starting point of the Mont Pelerin society and what Mirowski is doing is tracing the intellectual lineage forward from that point. It’s such a massive, rich book that it’s quite hard to get hold of in some ways. One strand is to do with the sociology of knowledge. Why do particular ways of thinking become dominant? He has the concept of the ‘neoliberal thought collective,’ as he calls it. It wasn’t these Bond-like villains sitting in the Alps conducting a conspiracy. But nor was it the result of a naïve, 19th century view that there’s a laissez-faire jostling of ideas and the best stuff will float to the top. It’s something in the middle. “His basic argument is that the crisis hasn’t acted as a point of falsification for neoliberalism. ” There was a concerted attempt by Hayek and others to push these ideas in a setting where the intellectual movement was going in the opposite direction—intellectuals were very much attracted to socialism and leftist thinking. He talks about a Russian doll structure emanating out from the MPS—various think tanks and research institutes fanned out from it in the post-war period. There’s a nice phrase in the book that Milton Friedman always said that government upsets things. What Friedrich Hayek was saying was, ‘Intellectuals upset things.’ Intellectuals at that time were leftists and there needed to be a fight to convert them to a different way of thinking. That’s a big theme that runs through the book. Towards the end he says something like, ‘If you’re on the left and are worried about some of this stuff, you need to understand the history a bit better. Know your enemy before you dream of a better world.’ There are movements—like the Occupy movement —that didn’t really understand that history very well, and where it all came from. It’s pretty trenchant stuff. His writing is extraordinary. It’s so erudite and he’s a polymath in terms of his learning and, at the same time, it’s so irreverent and rude at times, a bit heated. It’s not always easy reading. He really doesn’t pull his punches. He’s very, very, very critical of the economics profession. It’s been, according to him, guilty of evasion and obtuseness. You’re right there, but he would probably say that neoliberalism is this protean entity that is very good at co-opting objections. I can’t remember if Stiglitz comes into the book, but probably even someone like Stiglitz he’d be quite critical of, I suspect. He’s also making deeper criticisms about how economics is done and how it’s taught. There’s no history in it anymore. There’s no broad study of philosophy. It’s become this rather narrow subject and that has created blinkers, a rather group think-y approach to these issues. Those are then magnified by the Fed-Bank-Academy ‘unholy trinity,’ as he calls it. He’s a historian of economic thought. He’s coming from quite a heterodox intellectual background that is not particularly sympathetic to the way that economics is done and the deep methodology of economics today. His basic argument is that the crisis hasn’t acted as a point of falsification for neoliberalism. Rather than use it as an observation that would refute your theory, the response has been to rationalise it and patch things up and, I think he would even argue, make neoliberal ways of thought and the standard way of doing economics even more entrenched. Yes. He’s great at that kind of flourish and pulling out those intellectual ironies. I really enjoy that about Mirowski. One bit of the book I found particularly useful was his going through trying to define what neoliberalism is, because it’s one of those words that people use a lot but don’t really understand. Often there are some lazy conflations—that neoliberalism is the same as free market economics or laissez-faire. He points out that it’s not the same as that. Or, it’s the same as neo-classical economics. Again, it’s not the same thing. One way of getting to that is to say, ‘Okay, why is it not the same as classical liberalism?’ The idea of classical, 19th century liberalism is laissez-faire. The government is neutral and doesn’t do very much. It just lets markets do their thing, and you get a lovely outcome. This is Adam Smith, David Ricardo. What he’s saying is that neoliberalism is a constructivist type of project. It’s about having a more market-based society that goes across not just economics, but politics as well. And you actually have to impose that. You have to construct it—so actually neoliberal governments can be quite authoritarian. If you think about the Thatcher years, there was some real battling going on there. Neoliberalism has to have its shock troops. So, there’s a bit of a paradox there. The market is not this natural free-floating entity that will just settle here and emerge naturally. It needs to be created, imposed and built up. The structures need to be put in place for it to happen."