Colossus Wears Tweed

Colossus Wears Tweed

A number of recent books blame the rise of neoliberalism on economists. But the evidence suggests it is still capital that rules.

Milton Friedman poses with a sculpture of himself in 1986. (George Rose/Getty Images)

The Economists’ Hour: False Prophets, Free Markets, and the Fracture of Society
by Binyamin Appelbaum
Little, Brown, and Company, 2019, 448 pp.

The Marginal Revolutionaries: How Austrian Economists Fought the War of Ideas
by Janek Wasserman
Yale University Press, 2019, 368 pp.

Trumponomics: Inside the America First Plan to Revive Our Economy
by Stephen Moore and Arthur B. Laffer
All Points Books, 2018, 304 pp.

Sorting Out the Mixed Economy: The Rise and Fall of Welfare and Developmental States in the Americas
by Amy C. Offner
Princeton University Press, 2019, 400 pp.


Why write books about economists? They don’t read them. Less than half of economists surveyed believe that knowledge gained from multiple disciplines was better than that gained in one. Perhaps the indifference of economists helps fuel the rage against them—the toddler’s fury at the parent lost in thought.

The aloofness of economists might also deepen the sense that they are keeping something from us—that these mathematic mandarins in their hermetic hermitages spun round with formulae and data are modern-day Fausts, with access to the occult power of numbers that govern our daily lives: our FICO scores, the size of our monthly payments on credit cards and student debt, the burden of our rents and our mortgages, the size of life insurance payouts and damages for workplace injuries.

What is the Freakonomic clerisy hiding? In the last decade, it has become ever more acceptable to see this tribe of harmless-seeming men and women as not just conversant with the world’s ills but responsible for them. “The west . . . is becoming steadily more oligarchic,” the Financial Times recently observed. “We can thank the Chicago School [of Economics] for that.”

The basic proposition is that economists have been midwives of neoliberalism, leading the epochal transition from an era characterized by public spending, unionization, and expansion of social entitlements to our own times of shrinking public budgets, precarious labor, and personal debt. At each step in this journey, economists have aided in the reconstruction of capitalist power by delivering policy packages that are the equivalent of macro–mail bombs: pension reforms, constitutions with locks and bolts, tax cuts, deregulation schemes, privatization plans, justifications for monopolies and volatile money markets, currency reforms, self-help schemes, and handouts to Big Business.

Recall the scene from Ferris Bueller’s Day Off where Ben Stein tries to rouse his catatonic class to complete the phrase “voodoo economics.” Apparently that man now runs the world.


Colossus wears tweed. The claim seems outrageous on its face. How has it been supported? The power of economists has been easiest to see beyond Europe and North America. From the 1960s through the 1990s, authoritarianism and academic economics often went hand-in-mailed-glove, with advice about suppressing organized labor and beating inflation used in service of projects of export-led development. One scholar describes the “Berkeley mafia” in Suharto’s Indonesia as “economists with guns.”

The signature case of economics as an accessory to terror is Augusto Pinochet’s Chile. Milton Friedman, Friedrich Hayek, and James M. Buchanan all traveled to the country after the 1973 coup against the democratically elected Salvador Allende. Even if scholarly opinions vary wildly about the influence of these meetings, the Pinochet moment has become a set piece in books criticizing the role of economists in public life, including David Harvey’s A Brief History of Neoliberalism (2005), Naomi Klein’s The Shock Doctrine (2007), and Nancy MacLean’s Democracy in Chains (2017). We have read time and again how los Chicago Boys were emissaries from the Global North, sent to destroy social democracy and the power of the working class. The combination of authoritarianism and privatization was brought back north in the 1980s and 1990s, ushering in an era of austerity, debt, and dog-eat-dog economic Darwinism. Law professor James Kwak calls the new religion “economism”—“the premise that people, companies, and markets behave according to the abstract, two-dimensional illustrations of an Economics 101 textbook.” What united left and right, we are told, from Reagan and Thatcher to Clinton and New Labour, was the reduction of humans to human capital—bundles of skills and assets crunched and maximized, backs bent on productivity curves. We are all Excel spreadsheet cells now.

A straightforward and vivid version of this argument comes from New York Times writer Binyamin Appelbaum in The Economists’ Hour. Appelbaum follows closely the research done in the last quarter century on neoliberalism, although he never uses the word. His cast of characters mostly come from the University of Chicago, including a quartet of Nobel Memorial Prize winners—Friedman, Gary Becker, George Stigler, and Eugene Fama—supply-side economics guru Arthur Laffer, law and economics founder Henry Manne, and central bankers Arthur Burns, Paul Volcker, and Alan Greenspan. Friedman dominates. His name appears in the book over 500 times.

These men are mostly familiar, as are the policies they enacted: the dramatic rise in interest rates at the end of Jimmy Carter’s administration paired with massive tax cuts at the beginning of Reagan’s, deregulation and union-breaking in airlines and air-traffic control, cost-benefit analysis putting a price on human life, the rise of derivative markets and subprime mortgages. Appelbaum is an able storyteller, and he does a valuable service by covering all of these issues in a single volume. He offers a striking arc from the marginality of economists in state service in the 1930s to their centrality by the 1980s, underwriting high-stakes decisions that reverberate across people’s lives as workers and consumers.

The Economists’ Hour makes strong normative claims about the corrosive effect of this particular cohort of economists, who focused on efficiency and growth “without regard to the distribution of the gains,” thus “weaken[ing] the fabric of society and the viability of local governance.” Appelbaum’s book captures the mood of the more thoughtful sector of the financial press and the attendees of the World Economic Forum. They recognize that capitalism is in trouble. By isolating a discrete set of policies and naming and shaming a discrete set of scapegoats, they open the door for a new and improved crew of economists to introduce a more effective set of fixes: redistributive tweaks to salve the discontent of the hinterland, climate patches for the carbon problem, diversity quotas for representational imbalance. The message is that economists have done wrong, but they are not beyond redemption. Capitalism needs new ones to survive its latest bad run.


What happens when we subject some of the supervillains of economism to closer inspection? How much culpability can a small cast of economists carry? With Marginal Revolutionaries, historian Janek Wasserman offers a path-breaking account of the only group to rival the Chicago School in accounts of neoliberalism’s rise. Wasserman’s book is the first comprehensive and archivally driven history of the Austrian School of Economics from the late nineteenth century to the present. The school’s most famous representatives are Hayek and his mentor, Ludwig von Mises. These sons of the Habsburg Empire enjoy an almost cult-like following in some circles of the libertarian movement, from the far right to figures like former House speaker Paul Ryan, who Wasserman notes distributed The Road to Serfdom to his staffers.

Wasserman’s book deflates any overstatement of the Austrian School’s policy influence. Although Appelbaum’s title dubs economists “false prophets,” his subjects were more like engineers, engaged in the nuts-and-bolts interventions of antitrust litigators and central bankers. Hayek and Mises, by contrast, were more literally prophetic, writing gnomic and interdisciplinary treatises pored over by their followers. Wasserman cites some moments of policy influence from the Austrians, including Carl Menger’s role in changing currency policy under the Habsburgs and Gottfried Haberler and Fritz Machlup making the case for floating exchange rates (alongside Friedman) decades later. But he also notes that the flagship journals of Austrian economics rank near the bottom in reputation even of their own category of heterodox economics. Masters of the universe? They are not even masters of the university.

For a more direct illustration of how political power is exercised, consider Trumponomics, written by Stephen Moore and Arthur B. Laffer. If you and a friend wanted to go as libertarian ghouls for Halloween, you’d pick this duo. Moore holds an M.A. in economics from the stronghold of Austrian economics, George Mason University, qualification enough to become the “chief economist” of the Heritage Foundation in 2014 after stints at the Cato Institute and the Club for Growth (which he founded). Laffer advised Reagan and was known as the guru of his tax cuts.

A battle story from the war of ideas, Trumponomics explains how these two veterans of the conservative-industrial complex gambled by supporting Trump as a candidate when most of the free-market right spurned him. Swallowing the bitter pill of his protectionism, which they attribute to Steve Bannon, they made their idée fixe the tax cuts, which served as the dowry to the mainstream of the Republican Party. “Tax reform was like a rite of passage,” they recount, “and Trump was, at long last, admitted into the conservative fold, even if on probation.” Moore and Laffer praise their “deregulator in chief” for his forward-looking policy. They reserve much of the book for paeans to his energy policy of drilling, mining, and fracking, which dispenses with ideas of “climate change” (which they place in scare quotes) and Obama’s “grandiose dreams of the government somehow changing the weather.”

Of course, it is not the government changing the weather, but all of us. The fact that the authors title a chapter “Saudi America” and mean it like it’s a good thing tells us something both about their passion for continued “unleashing” of carbon-led growth as well as their attitude to governance. Moore has said elsewhere that “capitalism is a lot more important than democracy. I’m not even a big believer in democracy.” Interesting for us is how their story fits with explanations about the power of economists. In line with the famous cocktail napkin on which Laffer drew the curve justifying tax cuts for the wealthy in 1974, the authors offer the crudest possible example of class warfare from above by means of the discipline of economics.

Yet their success has not been total. Witness Trump’s trade policy. Although economists of nearly all political shades agree that free trade is preferable to protection, the present administration has bucked this consensus, placing massive tariffs on products from China in particular, but also against political allies like Canada and the European Union. Simple economism it ain’t. Trade strategy has followed the erratic unilateralism of United States Trade Representative Robert Lighthizer, Commerce Secretary Wilbur Ross, and trade adviser Peter Navarro far more than the free-trade orthodoxies of Libertania. There must be more to the story than Friedman’s henchmen squatting athwart the world.


Appelbaum, Wasserman, Laffer, and Moore all offer a variation of what could be called the anthrax theory of economic knowledge. Economists develop cultures in the laboratory of their texts, and policies serve as the delivery mechanisms into public life. In the conclusion to Sorting Out the Mixed Economy, her epic and field-changing work, historian Amy C. Offner identifies a starting point for this mode of argument: an article published in this very magazine in 1997 by Susan George, a storied scholar of international political economy. The title of the piece was “How to Win the War of Ideas,” with the subtitle “Lessons from the Gramscian Right.”

In her article, George faults the left for falling behind the right in the project of building “cultural hegemony.” As evidence, she names many of the people and institutions that populate the works of Moore and Laffer, Wasserman, and Appelbaum: Keith Joseph and the Centre for Policy Studies, Thatcher and the Institute of Economic Affairs, Hayek, Reagan, Heritage, and, of course, Friedman and the Chicago Boys. George was among the first wave of social scientists, including French sociologist Pierre Bourdieu and Third Way architect Anthony Giddens, to establish a binary between “social democracy” and “neoliberalism.” One had existed until the 1970s; the other reigned up to their—and our—present.

One of Offner’s most important claims is that we do violence to our understanding of history by adopting both this simple before-and-after story and by accepting on faith the starring role of economists and affiliated intellectuals. “The burgeoning literature on neoliberalism,” she writes, “is, to a significant extent, the mirror image of policy makers’ and businessmen’s triumphalist accounts of their own careers.” The idea of a period of state-driven economic growth giving way to an era of markets reinforces the aura of the very star economists that were architects of the change while concealing the ways that the seeds of the second era were sown in the first. By putting the burden of historical change on Friedman and his minions, we miss the real storyline.

Drawing on case studies of Colombia and the United States, Offner demonstrates that even at the zenith of social democracy, the dominant mode of socioeconomic change was not centralized decision-making but decentralized public-private partnerships designed to incorporate businesspeople into projects of extraction, cultivation, manufacturing, and construction. Economists tried to control the process—and use private capitalists for their own ends—but more often than not, they were the ones who ended up being used. “[E]conomists who considered themselves public-minded planners could never disentangle themselves from businessmen pursuing private interest,” she writes.

The shape of the state changed as a consequence. In her central example of the Cauca Valley in western Colombia, Offner finds that the state recreated “itself in the image of private enterprise, decentralizing public functions and vesting public powers in the leaders of a private business association.” When this model came home to the United States, it landed first in marginalized spaces—the “little Colombias” of inner cities and indigenous reservations—before being generalized. The private-prison complex, the commercial control of educational testing, and the for-profit provision of job training are bastard children not of neoliberalism but of the New Deal.

Because Offner’s primum mobile is not the academic economist but the capitalist, her tack is to shift attention to the business sector itself. What she finds time and again is that business interests are ambidextrous, happy to work as social democrats one moment if it serves their purposes, and neoliberals the next. True believers are in far less supply than pragmatists.


When Giddens theorized the Third Way in the late 1990s, he suggested we must stop worrying so much about equality and inequality and begin focusing on exclusion and inclusion. Crystallized here was a move that many define as economism: away from the political language of rights and toward the economic language of opportunities. Not everybody might end up successful, but everybody needed a chance. Offner’s study shows just how long these ideas had been around. The state long relied on private providers to expand the penumbra of its provisioning but only by offering ever more latitude and profit to private interests in a manner that undercut the universality of provision. In her words, “the state enlarged its capacity by underwriting the growth of private enterprise.”

What Offner calls the “parasitism of business mobilization during the heyday of developmentalism” meant flexibility. It’s not an entirely novel insight. Appelbaum cites one financial lender telling the Wall Street Journal that “We foreign bankers are for the free market when we’re out to make a buck and believe in the state when we are about to lose a buck.” But Offner shows how the voice of business entered the academy directly. Rather than portraying the rise of the economists as a smooth ascent, she portrays a struggle within the ivory tower’s commanding heights between the fields of economics and business administration.

Unlike economists, who look down on interdisciplinarity, the fields of management and business administration have always been syncretic, drawing on insights from across fields while centrally privileging the singular capacity and experience of the entrepreneur. Offner describes a position that is not seriously entertained by the other three books, but accords well with our world from Davos to Silicon Valley: the proposition that neither politicians nor economists but “corporate managers . . . were the true guardians of the public good and the proper stewards of the state.”

Offner brings home her arguments in a final chapter devoted to Eduardo Wiesner, a Colombian economist famous for his activity at the IMF and World Bank at the high point of structural adjustment in the 1980s and 1990s. Wiesner ended his career acting like a perfect character from Susan George’s 1997 article—or Appelbaum’s book—invoking Friedman and Buchanan to justify offloading state responsibilities to private actors and tying the hands of policymakers from expanding budgets. He would seem to be a great piece of evidence for the validity of the argument that one can track the spread of neoliberalism by following the footprints of the minions of Mont Pelerin around the world. Yet Offner insists that such a reading would take the bait laid by the libertarian propagandists themselves.

In fact, Wiesner had been active in development circles in Colombia since the 1960s, a time when he sang a different melody but danced to the same rhythm. The question he had been asking then was one that everybody—including all the expatriate New Dealers—was asking: how to extend state capacity in ways that broaden access to markets without giving rise to pesky questions about equality.

Wiesner’s solution then was everyone else’s: incentivize private capital to participate in state-managed projects. Over the decades, private capital flexed its muscles ever more and changing global circumstances made it ever harder for the state to capture revenue. By the 1990s, Wiesner could advocate the deployment of private interests to substitute for the state without moving definitively from one paradigm to another, from social democrat to neoliberal.

In Offner’s words, the mixed economy—always a hybrid of public and private forms—was simply reshuffled, leaving the public ever more subordinate to the demands of the private. As she sums it up powerfully, “Wiesner never saw himself as a state killer but as a defender of a state in danger of collapse.”


Economic reasoning has infiltrated political party programs and public rhetoric. It underpins the supposed objectivity of decisions that shape our lives, from state budget assessments to environmental policy to central bank direction. It deserves our attention and our careful study. Yet Offner’s book reminds us to keep one eye on the economists and the other on the shifting alliances of capitalists that profit from the policy worlds that social scientific knowledge helps create.

The need for a stereoscopic view is clear when trying to understand the way Trump’s administration has ruled economically. Despite apocalyptic pronouncements about the demise of the liberal international rules-based order, the sectors of the U.S. economy served by the current administration have changed at the margins rather than at the center.

Trump’s trade, tax, regulation, and manufacturing policy is not driven primarily by a theory of economics but by the influence of private interests in fulfilling their agenda through him. The title of another recent book argues that “economics rules,” but the evidence would suggest it is still capital that rules. To stage an effective opposition, it pays to recall Offner’s point that the most effective campaign against private power in the twentieth century was not mounted by international diplomats nor any kind of economists but by social movements determined in their own ways to refuse to be ruled at all.

Quinn Slobodian’s most recent book is Globalists: The End of Empire and the Birth of Neoliberalism (Harvard 2018). He teaches history at Wellesley College.

Correction: An earlier version of this piece wrongly stated that James Buchanan met with Augusto Pinochet. Buchanan visited Chile during the Pinochet era but did not meet with him. The text has been corrected above. We regret the error.

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