A Brief History of Neoliberalism

Abstract

[David Harvey] recites the now familiar chronology of the transition from the embedded liberalism of the post-World War II global economy to the neo-liberalism of the last quarter of the 20th century, and the opening years of the 21 st century. Key junctures include the following: in Chile in 1973, the military coup orchestrated by Pinochet with the support of the American imperial state which overthrew Allende's social democratic government and ushered in the first neo-liberal experiment in economics and state restructuring by 1975 ; in July 1979 in the United States under Carter's administration, Paul Volker's assumption of the command of the US Federal Reserve and the concomitant radical change in monetary policy; in May 1979 in Britain, Margaret Thatcher's electoral victory as prime minister; in 1980, Ronald Reagan's election to the presidency of the US; and, subsequently, a whole host of ideological, economic, and political processes which produced, by the 1990s, the solidification of the hegemony of the "Washington Consensus." Moreover, in what Harvey describes as "a conjunctural accident of world-historical significance" (120) - an accident, incidentally, that many accounts of neo-liberalism miss - tremendous political uncertainties in China after the death of Mao in 1976, as well as an extended period of economic stagnation in the country, ushered in a period of Chinese market reform under the leadership of Deng Xiaoping just as neo-liberalism was setting sail in Britain and the US. For Harvey, "The spectacular emergence of China as a global economic power after 1980 was in part an unintended consequence of the neoliberal turn in the advanced capitalist world." (121) Finally, Harvey's chronological account of the transition to neo-liberalism prominently features class conflict, a critical component left out of much of the mainstream social science literature. As the global phase of embedded liberalism entered meltdown in the late 1960s - manifested most emblematically by the stagflation and unemployment of the 1970s - "labour and urban social movements through much of the advanced capitalist world appeared to point towards the emergence of a socialist alternative to the social compromise between capital and labour that had grounded capital accumulation so successfully in the post-war period." (15) This was the political threat to the ruling classes which, when combined with the economic threat of negative interest rates and "paltry dividends and profits," led the upper classes "to move decisively if they were to protect themselves from political and economic annihilation." (15) The basis was laid for a political project to restore capitalist class power.