Once there was a golden age of democratic capitalism. Chastened by the Great Depression and cowed by vigorous labor movements, a generation of leaders forged a new type of political economy in the aftermath of the Second World War that united economic growth with robust welfare regimes. Then in the 1970s something went wrong, and the marriage of prosperity and equality crumbled. From the ashes of a fractured consensus, neoliberalism emerged. Suddenly the language of the market was on everyone’s lips, and deregulation, financialization, and a neologism called globalization carried the day. Franklin Roosevelt, John Maynard Keynes, and General Motors stand on one side of this yawning chasm, Ronald Reagan, Milton Friedman, and Goldman Sachs on the other.
At least, that is how the story goes. And it is an enormously popular story, one that has been used to explain everything from the origins of the financial crisis to the rise of summer blockbusters. For an optimistic reading, the capitalist on-the-go can consult The Commanding Heights, where Daniel Yergin and Joseph Stanislaw—two émigrés from the professoriate who traded posts in the academy for lucrative gigs in the corporate world—track a lonely band of crusaders led by the Austrian economist Friedrich Hayek as they waged a “battle of ideas” that eventually restored faith in the wisdom of markets. Those looking for a more critical evaluation can turn to David Harvey’s A Brief History of Neoliberalism, which retains the outline of Yergin and Stanislaw’s account but flips the black hats and white hats (and, it should be added, greatly increases the analytic heft). From Harvey, readers learn that Hayek and his allies helped construct a “benevolent mask full of wonderful-sounding words like freedom” that obscured “the grim realities of the restoration or reconstitution of naked class power.”
Angus Burgin’s The Great Persuasion asks us to attend more closely to this “benevolent mask” and the people who made it. When we do, he argues, it uncovers a history that fits poorly with both left and right variations on the ascent of neoliberalism. An intellectual historian by training, Burgin has a gift for integrating careful textual exegeses with panoramic surveys of the political scene, using a wide-angle lens to highlight what matters in specific texts while deploying close readings to revise the big picture.
His focus is precise; much of the book centers on the early years of the Mont Pèlerin Society, a group established in 1947 whose founders hoped to provide a refuge for opponents of collectivism. Yet close examination of this seemingly narrow frame scrambles the binaries separating right and left, uncovering a history where the supposed founders of the American chapter of neoliberalism at the University of Chicago reprimand Hayek’s The Road to Serfdom for overdoing its indictment of the state while Keynes reports himself “in a deeply moved agreement” with the very same text.
According to Burgin, Keynes was right to see much he could endorse in Hayek. The Road to Serfdomd, Burgin notes, “supported a role for the government in counteracting the business cycle, regulating a broad range of business activities, and administering extensive social insurance guarantees,” hardly the platform one would expect from a worshiper at the idol of laissez-faire. Nor was Hayek the only avowed proponent of markets willing to cede broad powers to the state. Even on the right, a multitude of priorities—safeguarding Christianity, preserving empire, winning the Cold War, finessing the relationship between capitalism and democracy—vied for precedence with defending the market. For most of the period covered by The Great Persuasion, Burgin’s central characters are drawn together more by opposition to a mounting enthusiasm for planning than by anything resembling a common program. They had an easy time denouncing their common enemies and issuing oracular proclamations on the need to uphold civilization, but explaining what needed to be done proved far more difficult.
Enter Milton Friedman. Almost universally depicted as Hayek’s heir, Friedman was always effusive in his praise for his senior colleague. Yet Burgin, in one of his greatest contributions, draws attention to the many issues—both superficial and substantive—that divided these very different thinkers. Hayek was always more comfortable debating with colleagues than promoting his ideas before larger audiences. Friedman, by contrast, relished his role as a public intellectual—not least because, as Burgin demonstrates at length, he was really good at it. Indeed, much of the last third of the book seems less the history of a great persuasion than an analysis of Milton Friedman, Great Persuader.
In a war movie from the era, Hayek would have made a perfect villain. The young Friedman, by contrast, would have been an ideal plucky cadet.
In the contest with Friedman, Hayek couldn’t even compete on style: his prose was clumsy and his thick Austrian accent made him seem irredeemably old Europe to American audiences. In a war movie from the era, Hayek would have made a perfect villain. The young Friedman, by contrast, would have been an ideal plucky cadet, part of a motley crew of soldiers ladled out of the melting pot and sent abroad to fight for freedom (although the real Friedman spent the Second World War shuttling among various government posts stateside). A child of Jewish immigrants from Hungary, Friedman was born in Brooklyn, grew up poor in New Jersey, stopped growing when he was just over five feet tall, and started his freshman year at Rutgers hoping to become an actuary. Friedman could be accused of many things, but being a patrician aristocrat was never one of them. He played to this populist-with-a-PhD image expertly, casting himself as a no-bullshit straight-talker who relied on common sense to put wooly-headed academics and snooty government bureaucrats in their place.
Where Hayek was philosophically oriented and prone to fatalistic musings on the futility of his project, Friedman was practical, empirical, and optimistic. Almost every problem, it seemed, could be solved with just a few easy steps. Inflation? Take away the Federal Reserve’s discretion with a rule-based monetary policy that kept the money supply’s growth within a targeted range, and while you were at it junk the Bretton Woods system to let exchange rates float. Taxes? Make them flat for individuals and abolish them for corporations. Worried about poverty? Create a negative income tax to guarantee a universal minimum standard of income while wiping out huge swaths of the federal bureaucracy. Education? Give parents vouchers and let schools duke it out for students. Health care? Start by abolishing the Food and Drug Administration, whose cumbersome approval process kept potentially life-saving drugs out of the hands of patients who needed them. And on, and on, and on.
By 1970 Friedman’s worldview had long since triumphed at Mont Pèlerin. The institution that Hayek had founded would endure, but it would be made to serve a purpose that differed profoundly from what its creator had envisioned—one more restricted in its philosophical ambitions yet more confident in its political aims. Meanwhile, Friedman’s arguments were gaining increasingly sympathetic hearings in the wider world. If the policies in the previous paragraph sound familiar, it is because so many of them migrated into the speeches of Republicans, and not a few Democrats. Burgin even suggests that Friedman’s rhetoric—“its emphasis on human freedom, its disparagement of government intervention, and its relentlessly optimistic valence”—provided a model for that other great persuader, Ronald Reagan. Though Friedman ended his life convinced that “we have succeeded in stalling the progress of socialism, but we have not succeeded in reversing its course,” judged by a more reasonable standard, one can only recognize that his influence was extraordinary. To Burgin, the moral is clear: ideas can—albeit through a complex and contradictory process—reshape politics.
Here Burgin strains his argument about as far as it can go—and, perhaps, a bit farther. As a corrective to what Burgin calls “the social-scientific impulse to harden ideas into rigid blocs” that has afflicted so much of the study of Hayek, Friedman, and their partners, The Great Persuasion succeeds marvelously. At times, however, Burgin flirts with a larger goal. While acknowledging that his account “is only one of many discrete subnarratives of the wrenching ideological transformation of the United States between the presidencies of Franklin Roosevelt and Ronald Reagan,” he also makes the grander claim that Friedman’s “rhetorical audacity succeeded in restructuring the terms of popular debate.” Yet Burgin’s normally lucid prose goes fuzzy whenever the question of causality emerges. Friedman’s ascent, he notes in an especially revealing formulation, “portended, and precipitated, the triumphant return of laissez-faire.”
Portending a revival, however, is a different matter than precipitating one. While Burgin easily proves the former, he does not marshal the evidence needed to make the case for the latter. The most compelling feature of Marxist interpretations of neoliberalism—Harvey’s, for example—is not the depiction of Hayek and Friedman as mouthpieces for a counterrevolutionary bourgeoisie. What resonates is the insistence that welfare-state liberalism and social democracy’s reversals since the 1970s have been so widespread that any explanation has to be structural. After all, there is an intuitive appeal to the proposition that a big event must have a big cause.
But there are good reasons to be skeptical about mechanistic analyses of a halcyon postwar moment undone by the logic of capital. Even capitalism’s golden age was mixed with baser metals, resilient conservative presences that tempered the aspirations of the left. If the triumph was more partial than easy caricatures allow, then it reduces the need for sweeping explanations of how the project ran aground. And if taking off the rosy-hewed spectacles reveals that the good times were never quite so good, it should also encourage a more nuanced reading of the present. Friedman, after all, is far from the only partisan of the markets to view the recent political scene with alarm.
As a piece of the richer history of the twentieth century that will emerge once fables of a lost golden age are dispensed with, The Great Persuasion is invaluable. Yet no study of a single collection of intellectuals, even one as brilliantly executed as Burgin’s, can by itself refute more structuralist glosses of neoliberalism’s origins, just as no surgeon equipped only with a scalpel could be expected to tear down a house. If anything, Burgin makes his task even more difficult by putting so much causal weight on one person. Friedman’s enemies would grant that if he had never been born, the intellectual life of the twentieth century would have been a little less exciting. But only his most deluded admirers would think he was essential to more than a tiny fraction of the changes gathered under the label of neoliberalism.
Emphasizing Friedman presents Burgin with another, more pedestrian challenge: if the gap between Hayek and Friedman is as vast as he claims, why should we care about Hayek, or the early years of the Mont Pèlerin Society, at all? Friedman benefited from his affiliation with the Mont Pèlerin Society, but it was far from the only organization that hastened his rise. In fact, he might have left the economics profession altogether in the 1930s if not for the explosion of employment opportunities in economic research spurred by the Great Depression.
The National Bureau of Economic Research, or NBER, was founded in 1920 by a cadre of economists eager to produce the statistics—on employment, income, production, and the like—its creators believed essential to policymaking. Friedman arrived at the NBER in 1937. Burgin mentions the NBER briefly, giving it a few paragraphs in the more than sixty pages devoted to Friedman. Yet during Friedman’s tenure, the NBER became as important an incubator for his ideas as the Mont Pèlerin Society would be after 1947.
Although Friedman’s practical, empirically oriented disposition set him apart from his colleagues at Mont Pèlerin, it was a typical element of life at the NBER. Friedman co-authored his doctoral dissertation with Simon Kuznets, the NBER’s star researcher. It came stuffed with an eye-glazing abundance of evidence that gave Friedman a template for his most influential academic work—A Monetary History of the United States, co-authored with Anna Schwartz, which laid the intellectual foundation for monetarism’s rise in the 1970s. Like Friedman’s dissertation, A Monetary History was an NBER product through and through: it was part of a larger NBER project that predated Friedman; it relied on data compiled by the NBER and methodologies developed there to interpret them; and it was published under the NBER’s auspices. Friedman’s stylistic panache and explicit ideological bent distinguished him from the usual NBER functionary, but his later career is inconceivable absent the training he received there. Those looking for his successor could do worse than to turn to Martin Feldstein, a Harvard professor who was made head of the NBER in the 1970s and used his position to help legitimize supply-side economics before heading to D.C. for a stint as chairman of Reagan’s Council of Economic Advisers, where he would be paid to do for Reagan what he had earlier done gratis.
While economists trimmed their philosophical aspirations and remade their discipline into something much more like engineering, we have asked these engineers to become our philosophers.
That an obscure (to non-economists) institute with a name like “the National Bureau of Economic Research” could wield such influence over policymaking was all but unthinkable at the turn of the twentieth century, when the only person employed by the federal government with the title of economist was an “economic ornithologist.” By the Second World War, the number had ballooned to over five thousand in the executive branch alone. Despite an initial retreat in peacetime, the count was soon back to wartime levels. It has stayed there ever since.
By the 1950s economists had become essential to governance across the planet. But they were more likely than ever to have been trained in one country: the United States, where generous funding and unrivaled prestige drew students from their home countries like iron filings to a magnet. Once they arrived in the United States, these students learned to practice a style of economics that diverged significantly from what Keynes, Hayek, or even Friedman had mastered in their younger days.
Burgin notes that “we now live in an era in which economists have become our most influential philosophers, and when decisions made or advised by economistic technocrats have broad and palpable influence on the practice of our everyday life.” Yet there is a puzzle here that Burgin skips over. While economists trimmed their philosophical aspirations and remade their discipline into something much more like engineering, we have asked these engineers to become our philosophers. The Great Persuasion is filled with astute evaluations of how economists, especially Friedman, assumed their new role as public intellectuals. It is less concerned with the “technocrats”—even when, as in Friedman’s case, philosopher and technocrat were one and the same; even when, as was the case for all economists, their prestige in the public sphere was inseparable from their discipline’s centrality to policymaking.
In Burgin’s telling, political debate across the twentieth century revolved around the opposing valuations attached to a few constant objects, most notably the state and the market. This is why he can argue that it makes sense to speak of a “return to laissez-faire.” While laissez-faire had never existed as more than a fantasy—the allegedly shriveled government of the nineteenth-century United States was strong enough to superintend the acquisition, surveying, and settling of a continent by force—the vocabulary that made it comprehensible as an ideal endured.
Considering the technocrats, though, complicates this portrait of continuity. Take the “economy,” that mainstay of contemporary politics. Before the 1920s, in the United States “economy” was typically used as a synonym for efficiency—think of economy-class travel today. People rarely talked about the economy, and those who did generally used it as a synonym for the much more prominent concept “society.” Within just a few decades, however, the economy had emerged as the central object of domestic politics. Economistic technocrats were essential to this transformation: they staffed agencies like the NBER, which produced the national income accounts that made the “economy” measurable; they advocated a new kind of mathematical economics that fostered the conviction the economy could be modeled; and they operated the ensemble of federal institutions designed to implement aggressive fiscal and monetary policies that were supposed to make the economy manageable. Alleged comprehension of the secrets of growth offered one of the key justifications for economists’ mounting influence after the Second World War. Yet the problem they claimed to have solved—the problem of how to make “the economy” grow—would have been incomprehensible, even to economists, not too many decades earlier.
History is not a series of arguments over static categories; it is a fevered battle where the terms of debate themselves are always in flux. Public, private, society, state, market, economy—any concept that matters has always been contested. For more than a century, some of the most important contests were waged by those often dismissed as technocrats. The recent past was a much stranger time than we, lulled by familiarity, presume today. We have a politics with a different vocabulary, different goals, different tools, and a different set of policymakers than anything that could have been envisioned just a century ago. Friedman’s world could never be Hayek’s. Laissez-faire remained as utopian a goal as ever, but too much had changed for it to be the same kind of utopia. There could be no return, only another reimagining.
Timothy Shenk is a graduate student in history at Columbia University. He is the author of Maurice Dobb: Political Economist, coming this November from Palgrave Macmillan.