Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics

Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics

Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics

Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics


How did American and British policymakers become so enamored with free markets, deregulation, and limited government? This book--the first comprehensive transatlantic history of the rise of neoliberal politics--presents a surprising answer. Based on archival research and interviews with leading participants in the movement, Masters of the Universe traces the ascendancy of neoliberalism from the academy of interwar Europe to supremacy under Reagan and Thatcher and in the decades since. Daniel Stedman Jones argues that there was nothing inevitable about the victory of free-market politics. Far from being the story of the simple triumph of right-wing ideas, the neoliberal breakthrough was contingent on the economic crises of the 1970s and the acceptance of the need for new policies by the political left.

Masters of the Universe describes neoliberalism's road to power, beginning in interwar Europe but shifting its center of gravity after 1945 to the United States, especially to Chicago and Virginia, where it acquired a simple clarity that was developed into an uncompromising political message. Neoliberalism was communicated through a transatlantic network of think tanks, businessmen, politicians, and journalists that was held together by Friedrich Hayek and Milton Friedman. After the collapse of Bretton Woods in 1971, and the "stagflation" that followed, their ideas finally began to take hold as Keynesianism appeared to self-destruct. Later, after the elections of Reagan and Thatcher, a guileless faith in free markets came to dominate politics.

Fascinating, important, and timely, this is a book for anyone who wants to understand the history behind the Anglo-American love affair with the free market, as well as the origins of the current economic crisis.


The ideas of economists and political philosophers, both when they are right
and when they are wrong, are more powerful than is commonly understood.
Indeed the world is ruled by little else. Practical men, who believe themselves
to be quite exempt from any intellectual influences, are usually the slaves of
some defunct economist. Madmen in authority, who hear voices in the air, are
distilling their frenzy from some academic scribbler of a few years back. I am
sure that the power of vested interests is vastly exaggerated compared with the
gradual encroachment of ideas. Not, indeed, immediately, but after a certain
interval; for in the field of economic and political philosophy there are not
many who are influenced by new theories after they are twenty-five or thirty
years of age, so that the ideas which civil servants and politicians and even
agitators apply to current events are not likely to be the newest. But, soon or
late, it is ideas, not vested interests, which are dangerous for good or evil.

JOHN MAYNARD KEYNES, The General Theory of Unemployment, 1936

Neoliberal ideas—monetarism, deregulation, and market-based reforms— were not new in the 1970s. But as Keynes suggested, they were the ideas to which politicians and civil servants turned to address the biggest economic crisis since the Great Depression. This book is about why this happened, and how the neoliberal faith in markets came to dominate politics in Britain and the United States in the last quarter of the twentieth century up to the financial crisis of 2008.

The demise of the postwar economic settlement had been hastened by a series of catastrophic events: the Vietnam War, the first oil shock of 1973, and the near collapse of industrial relations in Britain. The Keynes-inspired policies that governments had relied on to deliver a golden age of prosperity and rising incomes for the generation after 1945 seemed exhausted. The . . .

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