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Masters of the Universe

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

Daniel Stedman Jones
Copyright Date: 2012
Pages: 424
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  • Book Info
    Masters of the Universe
    Book Description:

    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 Universetraces 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 Universedescribes 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.

    eISBN: 978-1-4008-4473-9
    Subjects: History, Economics, Political Science

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Acknowledgments
    (pp. ix-x)
    Daniel Stedman Jones
  4. Timeline
    (pp. xi-xii)
  5. List of Abberviations
    (pp. xiii-xiv)
  6. Introduction
    (pp. 1-20)

    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...

  7. 1 The Postwar Settlement
    (pp. 21-29)

    In January 1944, President Roosevelt outlined to Congree his vision of a postwar society defined by social and economic citizenship rights. At the same time, Friedrich Hayek’s classic polemic,The Road to Serfdom, was at the publishers in London. Where Roosevelt saw an opportunity to embed and expand the liberal gains of the New Deal, which had been cemented by the war effort, Hayek and his friends saw only the threat of encroaching socialism, collectivism, and totalitarianism. As the war raged to a close, it was possible to see the clash of two diametrically opposed worldviews: American New Deal liberalism...

  8. 2 The 1940s: The Emergence of the Neoliberal Critique
    (pp. 30-84)

    As World War II drew to an end and an uneasy peace dawned, Friedrich Hayek began to develop an intellectual and organizational strategy to protect and maintain “the free society.” His strategy, which he laid out in his article “The Intellectuals and Socialism,” looked to the influence of the early twentieth-century American progressives and British Fabian socialists and argued that defenders of liberty would have to develop a similar organizational and intellectual strategy. During the war, Hayek worked at the London School of Economics (LSE, founded by the Fabian socialists Beatrice and Sydney Webb in 1895), which had been exiled...

  9. 3 The Rsing Tide: Neoliberal Ideas in the Postwar Period
    (pp. 85-133)

    After 1945, a distinct neoliberal worldview was built on the foundations of the critique of New Deal liberalism and social democracy synthesized in the writings of Ludwig von Mises, Friedrich Hayek, and Karl Popper. During the thirty years after the publication of Hayek’s essay, “The Intellectuals and Socialism,” in 1949, a transatlantic movement was launched and moved into a preeminent position. Its main tenets—philosophical, political, and economic—were worked out in detail by scholars such as Milton Friedman, George Stigler, Gary Becker, James Buchanan, and Gordon Tullock, as well as Hayek and Mises, and the locus of research activity,...

  10. 4 A Transatlantic Network: Think Tanks and the Ideological Entrepreneurs
    (pp. 134-179)

    A transatlantic network of sympathetic businessmen and fundraisers, journalists and politicians, policy experts and academics grew and spread neoliberal ideas between the 1940s and the 1970s. These individuals were successful at promoting ideas through a new type of political organization, the think tank. The first wave of neoliberal think tanks were set up in the 1940s and 1950s and included the American Enterprise Institute (AEI) and the Foundation for Economic Education (FEE) in the United States, and the Institute of Economic Affairs (IEA) in Britain. A second wave of neoliberal think tanks were established in the 1970s, including the Centre...

  11. 5 Keynesianism and the Emergence of Monetarism, 1945–1971
    (pp. 180-214)

    The neoliberal breakthrough came in the seemingly unlikely realm of technical economic policy. The long postwar boom, often dubbed the Golden Age of capitalism, continued through the 1950s and 1960s, when politicians and publics alike believed they understood how to effectively manage capitalism using the tools of demand management developed by John Maynard Keynes and especially as expanded by the next generation of Keynesian economists. The tide had not yet began to turn in favor of the free market. That would not happen until the crises of the 1970s forced a change in policy direction. But an important set of...

  12. 6 Economic Strategy: The Neoliberal Breakthrough, 1971–84
    (pp. 215-272)

    Economic crisis led to the breakthrough of transatlantic neoliberal politics in the 1970s. As Britain and the United States experienced stagflation— the combination of high unemployment, high inflation, and low or no growth—political leaders and policymakers, for the first time since World War II, cast around for serious alternative economic policies to Keynesian demand management. The end of the Bretton Woods international monetary system, two oil price shocks in 1973 and 1979, the Vietnam War, the Watergate break-in at the Democratic Party headquarters in Washington, D.C., at the behest of senior figures of the Nixon administration and with the...

  13. 7 Neoliberalism Applied? The Transformation of Affordable Housing and Urban Policy in the United States and Britain, 1945–2000
    (pp. 273-328)

    There was a slow transformation in affordable housing and urban policy between the 1960s and the 1990s in both the United States and Britain. Housing and urban policy for low- and moderate-income groups was one of the few social policy areas where the administrations of Margaret Thatcher and Ronald Reagan had a positive program to counter what they saw as a culture of dependency created by the welfare state. The problem of how to help disadvantaged people and poor communities was to be addressed through incentives, deregulation, and the creation and stimulation of opportunities in the private market. The state...

  14. Conclusion The Legacy of Transatlantic Neoliberalism: Faith-Based Policy
    (pp. 329-346)

    Neoliberalism transformed British, American, and global politics. At the dawn of the twenty- first century, the triumph of the free market was almost universally accepted by mainstream politicians, public officials, and civil servants. More important, the distinctive neoliberal brand of free market individualism had prevailed over alternative forms of managed market- based capitalism.

    Neoliberalism was a radical form of individualism that was first generated before World War II in a reaction to New Liberalism, Progressivism, the New Deal, and the onset of Nazi and communist totalitarianism. Together, these strands were called “collectivism” by neoliberals. In 1947, economists surrounding Friedrich A....

  15. Notes
    (pp. 347-390)
  16. Index
    (pp. 391-418)