A Brief History Of Neoliberalism

Ronald Reagan (1911-2004) was a Republican politician who served as President of the United States from 1981 to 1989. Reagan came to power during a period of “stagflation,” where inflation was high, economic growth was slow, and unemployment was relatively high. To address this economic situation, Reagan instituted a series of neoliberal policies referred to as “Reaganomics.” These included reducing government spending and cutting taxes under the theory that wealth would “trickle down” from the upper classes to the lower classes. This set of policies, however, resulted in an increase in economic inequality. As described in A Brief History of Neoliberalism, Reagan also sought to reduce the power of the unions and organized labor by breaking strikes and changing labor law.

A key component of Reaganomics was reducing the money supply by raising the Federal interest rate and drastically increasing unemployment. This policy was known as the “Volcker shock,” named after the architect of the plan, Paul Volcker, who was the chairman of the Federal Reserve under President Carter and President Reagan. The Volcker shock caused a financial crisis in the United States, which later spread to other countries.

Ronald Reagan’s administration not only implemented neoliberal policies in the United States, but was also instrumental in working with international institutions such as the IMF to ensure neoliberalism was spread abroad.

Margaret Thatcher (1925-2013) was Prime Minister of the United Kingdom from 1979 to 1990. She was a controversial leader who implemented a number of key neoliberal policies in the United Kingdom, sometimes in the face of opposition from within her own Conservative Party (also known as the Tory Party). Neoliberalism in the United Kingdom is less of a focus in A Brief History of Neoliberalism than the United States, but it is still of particular interest to Harvey. As Harvey describes, under Thatcher, key national industries and sectors became privatized, including water, gas, and public housing. Like Reagan, Thatcher reduced the power of organized labor through breaking union strikes and changing labor laws. She also reduced taxes and implemented austerity measures to curb government spending. However, due to the political and historical realities of Britain, she was not entirely successful in privatizing all sectors of the economy. The United Kingdom has a national healthcare system that remained public under Thatcher’s regime. Harvey uses this as an example of the Political Dynamics of Neoliberalism that influence the extent to which neoliberal policies can be implemented in a given place or time.

Deng Xiaoping (1904-1997) was the Chairman of the Chinese Community Party (CCP) from 1982-1987. Chairman Ding came to power after shortly after the death of Chairman Mao Zedong. During Deng’s reign, China’s economy shifted from a planned market economy to a more free-market economy that incorporated aspects of neoliberal policies. Harvey extensively details these policies in Chapter 5 of A Brief History of Neoliberalism, “Neoliberalism ‘with Chinese Characteristics.’” Deng used the Chinese concept of xiaokang, “the concept of an ideal society that provides well for all its citizens” to promote and gain support for modernizing reforms (120). Unlike other countries that pursued more rapid neoliberalizing policies, Deng opted for a more staggered series of reforms which he described as “‘groping the stones while crossing the river’” (122).

Deng earned notoriety in the West for his crackdown on student protesters in Tiananmen Square in Beijing in 1989. Protestors were contesting the rapid changes of the liberalizing economy and advocating for greater civil liberties. Deng ordered military intervention, resulting in the deaths of an unknown number of civilians.

Karl Polanyi (1886-1964) was an Austro-Hungarian economist and sociologist influenced by Karl Marx, although he disagreed with some Marxist ideas. His most famous text is The Great Transformation (1944), which argued that the market system fundamentally changed people’s relationships to one another and serves as a form of ethics. Harvey uses the concept of freedom as outlined by Polanyi in The Great Transformation to describe how market capitalism creates good as well as bad freedoms. The bad freedoms he noted were, among others,

the freedom to exploit one’s fellows, or the freedom to make inordinate gains without commensurable service to the community, the freedom to keep technological innovations from being used for public benefit, or the freedom to profit from public calamities secretly engineered for private advantage (36).

Polanyi critiques the work of Hayek and other economists who promote unregulated capitalism by noting: “Planning and control are being attacked as a denial of freedom,” and the only way such a system can “be sustained is by force, violence, and authoritarianism” (37).