The Origins of Neoliberalism, Part II – The Americanisation of Hayek’s Delusion

[PETRUS]

(Part one posted here.)

<snip>

A major concern of the American members of the Mont Pelerin Society, most of whom were based out of the now infamous Chicago School of Economics and Law, was to make Hayek’s delusion more palatable to the American public. During the Second World War many New Deal institutions had solidified and become popular with the public and after the war the majority of Americans did indeed think that their country, while definitively capitalist, was nevertheless one in which the government played a rather large and constructive role.

The political right found themselves completely flummoxed by such a situation. More practical men, like President Ike Eisenhower, jumped on board, while fringe elements, like Joe McCarthy, fled into paranoia, attacking many prominent liberals as Communist agents. Already in the wartime planning era of the 1940s, when Keynesianism loomed large in America, those economists at the Chicago School and elsewhere in the US who had read and absorbed Hayek’s delusion knew that they needed to change the terms of the debate. But how they were to do this proved a daunting question...

<snip>

...The money men loved Hayek’s message that government interference and economic planning would lead to tyranny, but they were not so keen on his purist free market ideas. Fortunately for them, however, Hayek himself was less concerned with constructing a pure free market system than he was with fighting the ghost of what he called “socialism”. Thus a union was accommodated and the child of this marriage was to be Milton Friedman...

<snip>

Before turning to this, however, we should briefly highlight this emergent anti-socialist trend – or, more accurately, this ideological trend constructed against what a fringe group of people thought to be “socialism”. It is this we hear when we stick our ears into the right-wing echo chamber in America today.

(Read more: http://www.nakedcapitalism.com/2013/01/philip-pilkington-the-origins-of-neoliberalism-part-ii-the-americanisation-of-hayeks-delusion.html)

[Odin2005]

1. Hayek only got one thing right:

That command economies don't work. Unfortunately he then falsely, and IMO intentionally, conflated a command economy with socialism.

[Fantastic Anarchist]

7. Exactly. That's a point that doesn't get stressed enough.

[pa28]

2. When a neo-liberal says the word "freedom" you'd better watch out.

Excellent read and I'll look forward to part 3.

[Mosaic]

3. We ALL need to be schooled on neoliberalism's evils

Thanks for posting!

[marmar]

4. k/r

[pscot]

5. How much did the economists influence

the law school? What's Chicago Law's rep? I've been wondering about that for several years now.

[PETRUS]

6. Couldn't say, but...

I've heard there's a joke told throughout all of the social science departments at Chicago that goes something like: well, that's all well and good in practice, but does it work in theory?