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Masters of the Universe

Hayek, Friedman, and the Birth of Neoliberal Politics


Daniel Stedman Jones


Princeton: University Press, 2012

Hardback. xiii+418 p. ISBN 978-0691151571. $35.00


Reviewed by Françoise Coste

Université Toulouse—Jean-Jaurès



The goals of Daniel Stedman Jones in writing Masters of the Universe : Hayek, Friedman, and the Birth of Neoliberal Politics were rather ambitious. In the introduction, he explains his intention to add to the study of neoliberalism (defined here as “the free market ideology based on individual liberty and limited government that connected human freedom to the actions of the rational, self-interested actor in the competitive marketplace”) in three different ways: by stressing the transatlantic nature of this school of thought, by analyzing its intellectual development in the 20th century, and by showing how the movement managed to leave the world of intellectuals to enter into that of politics in Britain and the United States.

On these three points, and more, Jones brilliantly succeeds, thanks to his obvious mastery of the main neoliberal texts, his very astute use of historical archives (like the Hayek or Friedman Papers), and the many interviews he conducted with key neoliberal players in Europe and America. The comparisons and the back-and-forth between the British and American branches of the movement are constant. The first chapters describe the European origins of neoliberalism—a term first used by international economists who met in Paris in 1938 during the famous “Colloque Walter Lippman.” Influenced by the Austrian school of economics, they defended “more than a simple return to laissez-faire economics” and wished instead to reformulate liberalism to adapt it to the realities of the 1930s. Daniel Stedman Jones very clearly explains the contributions of the three great names of this first neoliberal wave, Karl Popper, Ludwig von Mises, and Friedrich Hayek in a period, especially after the Second World War, where the center of gravity of the intellectual and political worlds on both sides of the Atlantic was firmly rooted on the Left. The most interesting passages in these pages are the ones where David Stedman Jones goes beyond the well-known critique of the state by such writers to stress the fact that, obviously still influenced by the Great Depression, they were ready to recognize the need for minimal social safety nets and for the prevention of monopolies through government action. His approach is therefore full of nuances, far from the worn-out clichés about neoliberalism.

Daniel Stedman Jones also succeeds in analyzing the steady development of the movement in the US after the foundation by Hayek of the Mont Pélerin Society (in Switzerland) in 1947. From the 1950s onward American academics, backed by well-organized think tanks and generous corporate contributors, became more and more prominent within neoliberalism, especially through the Chicago school (Jones also mentions the Virginia school and its theories on public choice, albeit too rapidly). The emergence of this second wave constitutes the core of the book. Daniel Stedman Jones shows it adopted a more radical aversion to the state than its European forebears. The towering figure here is of course Milton Friedman, whose philosophy is described at length. Stedman’s choice is quite enlightening: he of course details the nature of monetarism, Friedman’s great contribution to the field of monetary policies; but he also illustrates the fallacy of Friedman and his disciples when they claim the mantle of Adam Smith: Smith was a classical liberal whose writings consistently displayed moral concerns, whereas “neoliberal thought was fundamentally based in dry economic processes rather than values” (hence the justification of social inequalities, the acceptance of monopolies, or the choice of placing the fight against inflation above that against unemployment).

The second part of the book is devoted to the very close bonds that were formed between the international network of neoliberal think tanks (“a Neoliberal International” with famous organizations like the AEI, the IEA, the ASI or the CPS) and political leaders in Britain and the US. Jones is right to remind his readers of the fact that the rupture with Keynesianism in these countries actually happened under left-wing governments worried about the runaway inflation of the 1970s (those of Callaghan in Britain and Carter in the US). But he also shows how it was mostly the Right which reaped the fruits of the apparent total failure of the Keynesian model in the late 1970s. But if Jones is very convincing when he uncovers the deep relationships between Margaret Thatcher, Ronald Reagan, and neoliberal intellectuals, he seems to be on shakier ground when he writes about the actual political developments that marked the 1980s—the best illustration of this being the last chapter devoted to the question of housing under the Thatcher and Reagan administrations, which sometimes lacks concrete descriptions about the nature and the results of these neoliberal reforms. Stedman Jones is thus generally much more at ease when analyzing the intellectual dimension of neoliberalism than when dealing with its political incarnations. This is why he sometimes quickly puts aside central political elements (like the role played by the racial question in the emergence of contemporary conservatism in the US, or the historical process through which the term “liberal” actually came to be associated with the Left under Roosevelt), or even makes mistakes (for instance when he incorrectly repeats that Ronald Reagan gave his famous Speech at the 1964 Republican Convention, when he actually did it on television a few days before the presidential election of that year).

Such small problems do not at all alter the indisputable thesis of the book: the success of neoliberalism—which continues to this day despite the responsibility of its blind faith in the free market in the 2008 financial crisis, as Stedman Jones shows in his excellent conclusion―is due to the combination of two factors. First, the patient and impressive work neoliberal intellectuals devoted for decades to the building of an alternative theoretical infrastructure opposed to the triumphant Keynesianism of the mid-20th century; second, the “historical accident[s] and a particular alignment of circumstances in the 1970s” which convinced voters and leaders alike that the economic order was collapsing and that it was time to turn to this conveniently available new set of ideas. Stedman Jones thus both rejects a teleological reading of the successes of neoliberalism and admits its absolute victory. Regardless of one’s ideological leanings, it is hard not to read Hayek’s roadmap in his famous 1949 essay The Intellectuals and Socialism (“We must make the building of a free society once more an intellectual adventure”), and not conclude, like David Stedman Jones: “the results have been extraordinary.”


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