Never Let a Serious Crisis Go to Waste

by Philip Mirowski

  42 Later, one might add “Virginia public choice theory” as a fourth. For an insider’s attempt at discrimination between the Hayekians and the Chicago School, see Skousen, Chicago and Vienna. For an overview of the Ordoliberals, see Nicholls, Freedom with Responsibility. For some history of public choice, see Amadae, Rationalizing Capitalist Democracy.

  43 Hayek to Arthur Seldon, May 13, 1985, quoted in Hennecke, Friedrich August von Hayek, p. 316.

  44 Howard and King, The Rise of Neoliberalism in Advanced Capitalist Economies, p. 11.

  45 Jones, Masters of the Universe.

  46 Peck, Constructions of Neoliberal Reason, p. 72.

  47 Zuidhof, Imagining Markets.

  48 In Burgin, The Return of Laissez Faire, p. 180.

  49 Hayek to de Jouvenel, October 4, 1950, quoted in Burgin, The Return of Laissez Faire, p. 206.

  50 Hartwell, A History of the Mont Pèlerin Society, p. 44.

  51 See the letter from Smedley to Anthony Fisher dated June 25, 1956, quoted in Cockett, Thinking the Unthinkable, p. 131: “[I]t is imperative we should give no indication in our literature that we are working to educate the Public along certain lines which might be interpreted as having political bias . . . it might enable our enemies to question the charitableness of our motives.” For Leonard Read admitting the same thing, see Burns, Goddess of the Market, p. 116.

  52 Burgin, The Return of Laissez Faire, p. 306.

  53 Some important examples: the Heritage Foundation (USA), the Manhattan Institute (USA), the Mercatus Center (USA), the Fraser Institute (Canada), Stiftung Marktwirtschaft (Germany), Center for a New Europe (Brussels). There are even specialized neoliberal think tanks devoted to science policy, such as the George Marshall Institute, the Annapolis Center, the Heartland Institute, and the Ethics and Public Policy Center—note the anodyne names, hiding the political orientation.

  54 For more on Atlas and Antony Fisher, see www.atlas.org and Frost, Antony Fisher; Hoplin and Robinson, Funding Fathers, chap. 6; Burton, “Atlas Research Foundation.”

  55 The byzantine politics of the Murdoch empire is discussed in an interesting fashion by Adam Curtis at www.bbc.co.uk/blogs/adamcurtis/2011/01/rupert_murdoch_-_a_portrait_of.html.

  56 Covington, “Moving Public Policy to the Right,” pp. 91–92; also Medvetz, Think Tanks in America.

  57 The various ways in which fake local grass-roots movements are co-opted by neoliberal organizations has become the subject of some journalistic interest. One telling example in the arcane technical area of environmental sciences was the subject of a PBS program reporting on the investigations of the journalist Paul Thacker (see American Investigative Reporting, program 11, November 10, 2006, accessed at www.pbs.org. For another perspective, see (Astro)Turf Wars (2010).

  58 Davidson, “Prime Time for Paul Ryan’s Guru.”

  59 Max Thurn, 1964 meeting records, LAMP, emphasis added.

  60 Insistence upon this point has been one of the great strengths of the Foucault-inspired tradition of analysis of neoliberalism, an argument made with great effect by Donzelot, “Michel Foucault and Liberal Intelligence.” It was also a major theme of Brown, Edgework.

  61 Quoted in Cockett, Thinking the Unthinkable, p. 112.

  62 The complaint that this construction is too narrow (D. Jones, Masters of the Universe) confuses its use to define neoliberalism, and other uses in tracking the political activities of neoliberals. This chapter is engaged in the former; the remainder of the book with the latter.

  63 This point is nicely made by Dean, “Rethinking Neoliberalism.”

  64 Van Horn and Mirowski, “The Rise of the Chicago School and the Birth of Neoliberalism”; Van Horn and Klaes, “Chicago Neoliberalism Versus Cowles Planning.”

  65 Kaiser, How the Hippies Saved Physics; Kragh, Higher Speculations.

  66 One interesting meditation can be found in Brenner et al., “Variegated Neoliberalization,” where they take the governmentality literature to task for imagining a “context-drenched, haphazardly mobile, radically fluid and infinitely mutable” portrait of neoliberalism. The extent to which the neoliberal project is “top down” or “bottom up” is something that has been transcended by the Russian doll structure, in my view. Another is Zuidhof (Imagining Markets), who finds neoliberal discourse is more deeply “statist” in the Netherlands than in the United States. One might aver this is due to the greater salience of ordoliberalism in Holland.

  67 Peck, Constructions of Neoliberal Reason, p. 30.

  68 Brenner, Peck, and Theodore, “Variegated Neoliberalization”; Klein, The Shock Doctrine.

  69 In this volume I will avoid detailed specification of what actual persons would or would not subscribe to each individual tenet, mainly because such detailed historical work would take us too far away from our focus on the crisis. However, this should not be taken to imply in any way that I deem such work unimportant.

  70 Foucault, Naissance de la Biopolitique, p. 137, my translation; Wolin, Politics and Vision, p. 314; Peck, Constructions of Neoliberal Reason, p. 3; Wacquant, “Three Steps to an Historical Anthropology of Actually Existing Neoliberalism.”

  71 See Wiseman, Cost, Choice and Political Economy; Buchanan and Vanberg, “Constitutional Choice, Rational Ignorance and the Limits of Reason.” This is the version that comes closest to Ayn Rand and the “Objectivists,” although Rand herself found Hayek anathema. In Burns, Goddess of the Market, p. 104, she is quoted as saying, “The man [Hayek] is an ass, with no conception of a free society at all.”

  72 This is discussed in greater detail in Caldwell, Hayek’s Challenge; Mirowski, Machine Dreams, “Naturalizing the Market,” and in my forthcoming lectures, “The History of the Economics of Information.”

  73 Ptak, “Neoliberalism in Germany”; Bonefeld, “Freedom and the Strong State.”

  74 The similarities to Christian notions of the Godhead are perhaps not altogether accidental. “In the Ordo-liberal scheme, the market does not amount to a natural economic reality, with intrinsic laws that the art of government must bear in mind; instead, the market can be constituted and kept alive only by dint of political interventions” (Lemke, “The Birth of Biopolitics,” p. 193).

  75 This is further discussed by Mirowski in Van Horn et al., Building Chicago Economics. See also Vroman, “Allusions to Evolution,” and Mirowski, Machine Dreams, on the origins of the “cyborg sciences.”

  76 Cooper, Life as Surplus; Nadesan, Governmentality, Biopower and Everyday Life.

  77 See, for instance, McKinnon, Neo-liberal Genetics; Ridley, The Agile Gene and The Rational Optimist; Pickering, The Cybernetic Brain; and my review of the latter book in Technology and Culture, 2012.

  78 Cooper, “Complexity Theory after the Crisis”; Walker and Cooper, “Gene­alogies of Resistance.”

  79 This subtle ontological move and its relationship to political action is best illustrated by the neoliberal response to global warming, discussed in ­chapter 6.

  80 Peck, Constructions of Neoliberal Reason, p. xiii.

  81 Neoliberals tend to perceive democracy as desirable only insofar as democratic institutions encourage the development of the economic system they advocate. This was noted as far back as Friedrich, “Review: The Political Thought of ­Neo-Liberalism,” and the topic of many commentaries on the neoliberal project. See Brown, Edgework; Plehwe et al., Neoliberal Hegemony; Robison, The Neoliberal Revolution; Turner, Neo-liberal Ideology; Dean, “Rethinking Neoliberalism”.

  82 Hayek, Studies in Philosophy, Politics and Economics, p. 161.

  83 Power, The Audit Society; Lane, New Public Management.

  84 It was an early clear signal of the unwillingness of the Obama administration to clean up the financial sector that he appointed Mary Schapiro as his new chair of the Securities and Exchange Commission, previously the chair and CEO of FINRA in 2009, long an advocate of the position that the financial sector had suffered overregulation.

  85 On the modern trend toward privatized military functions,
see Singer, Corporate Warriors; Scahill, Blackwater. The constant bewailing of the size of government is a win-win situation for neoliberals: they complain about recent growth of government, which they have themselves fostered, use the outrage they fan to “privatize” more functions, which leads only to more spending and a more intrusive infrastructure of government operations. The same dynamic is now at play in the further privatization and “rationalization” of European state health care systems.

  86 Hayek, “The Moral Element in Free Enterprise.”

  87 In this regard, the nominally left-liberal tradition of “social-choice theory” (Kenneth Arrow, Amartya Sen, John Rawls) by this criterion is virtually as neoliberal as the right-wing tradition of the “public-choice theory” of Buchanan and Tullock and the Virginia School. See Amadae, Rationalizing Capitalist Democracy; Arnsperger, Critical Political Economy.

  88 Plant, The Neoliberal State.

  89 Foucault, The Birth of Biopolitics, p. 226.

  90 Davis, The Theory of the Individual in Economics and Individuals and Identity in Economics.

  91 Milton Friedman in Friedman and Samuelson, Discuss the Responsibility of Government, p. 5.

  92 “Neoliberalism figures interest as both a psychology that drives rational choices, and as the good achieved by those choices. Subjective and objective interests are thus rendered neatly compatible: questions of false consciousness on the one hand, or of a ‘real interest’ that exceeds what people can realize by means of price-taking choices on the other, are not so much answered as they are rendered unintelligible” (Mathiowetz, Appeals to Interest).

  93 Hayek, The Constitution of Liberty, p. 81; Plant, The Neoliberal State, p. 67; Friedman, “Economic Freedom Behind the Scenes.”

  94 On “negative” rather than “positive” definitions of freedom, see Berlin, “Two Concepts of Liberty”; Smith, “Friedman, Liberalism, and the Meaning of Negative Freedom.” Even Berlin, not often considered a supporter of neoliberals, suggests that positive freedom leads inexorably to totalitarian systems. Hayek insists positive freedom violates the rule of law (Plant, The Neoliberal State, p. 38). The neoliberal subject is not supposed to be “free” to meditate upon the nature and limits of her own freedom—that is the dreaded “relativism” which neoliberals uniformly denounce.

  95 Behrent, “Liberalism Without Humanism.” This is discussed in the next chapter, in the section on governmentality.

  96 See Kristol, “Socialism, Capitalism, Nihilism,” LAMP, Montreux meeting, 1972: “And what if the ‘self’ that is ‘realized’ under the conditions of liberal capitalism is a self that despises liberal capitalism, and uses its liberty to subvert and abolish a free society? To this question, Hayek—like Friedman—has no answer.”

  97 There are exceptions to this generalization. For instance, the MPS member Gary Becker has proposed to solve illegal immigration by “selling” the rights to citizenship. This reduces state services to the ultimate commodity. It is significant that few other neoliberals have endorsed this complete dissolution of nationalist identity, although one could argue it follows logically from the other tenets of the program. What can nationality mean for a person without a stable identity?

  98 See Helleiner, States and the Re-emergence of Global Finance; Weller and Singleton, in Plehwe et al., Neoliberal Hegemony; Thirkell-White, in Robison, The Neoliberal Revolution.

  99 In Mirowski and Plehwe, The Road from Mont Pèlerin. See also Chwieroth, Capital Ideas.

  100 Hayek, Studies in Philosophy, Politics and Economics, p. 172.

  101 See the papers and data available for download at http://elsa.berkeley.edu/~saez/.

  102 Rajan, Fault Lines.

  103 See Van Horn and Mirowski, “The Rise of the Chicago School and the Birth of Neoliberalism.”

  104 Nace, Gangs of America.

  105 Jensen and Meckling, “Theory of the Firm.”

  106 Nik-Khah, “A Tale of Two Auctions.”

  107 On the ill-fated DARPA “policy analysis market” project, see www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2003/07/29/MN126930.DTL (accessed December 2, 2006) and Justin Wolfers and Eric Zitzowitz, “Prediction Markets in Theory and Practice,” www.dartmouth.edu/~ericz/palgrave.pdf.

  108 For unabashed examples of this neoliberal argument, see Litan, “In Defense of Much, but Not All, Financial Innovation” and The Derivatives Dealer’s Club; Shiller, Finance and the Good Society. A more skeptical summary is Engelen, et al., After the Great Complacence. This constitutes a major component of the full-spectrum political response of the NTC to the crisis, as described in chapter 6.

  109 Harcourt, The Illusion of Free Markets, p. 147.

  110 Posner, quoted in ibid., p. 149.

  111 Hayek, The Constitution of Liberty, p. 68, 69; Hayek, Studies in Philosophy, Politics and Economics, p. 155; Hartwell, A History of the Mont Pèlerin Society, p. 47. Modern neoliberals more or less echo these sentiments: “Our opponents have every right to contend that economists are unwisely idolizing liberty, but they err by saying we sail without a moral North Star” (Glaeser, “The Moral Heart of Economics”).

  112 Hayek, “The Moral Element in Free Enterprise.”

  113 Buchanan, Ideas, Persons and Events; Amable, “Morals and Politics in the Ideology of Neoliberalism.”

  114 See, for instance, Linker, The Theocons; S. Diamond, Roads to Dominion; Eecke, “Ethics in Economics.” Hayek tipped his hand on his own approach to a general philosophy of neoliberalism when he said in the discussion of the MPS session on April 4: “Does liberalism presuppose some set of values which are commonly accepted as faith and in themselves not capable of rational demonstration?” (MPS archives, 1947 meeting). It seems clear from his later writings that he believed this was true about belief in the superiority of market organization itself.

  115 Smith, Cambridge Companion to Leo Strauss, p. 18.

  116 Davies, “The Emerging Neo-communitarianism.”

  117 Oliver, “German Neoliberalism.”

  118 From unpublished speech by Friedrich Hayek, “The Prospects of Freedom,” quoted in Burgin, The Return of Laissez Faire, p. 180. The Burgin thesis has a nice discussion of the struggles of the early MPS with the incongruity of its character as a closed society; as he says, “an organization which forced members to hold a liberal point of view would be, in its very structure, illiberal” (p. 187).

  119 Popper to Hayek, January 11, 1947. Karl Popper papers, Hoover Institute, Stanford California, Box 305, folder 13.

  120 See, for instance, his 1954 speech “Towards a Liberal Theory of Public Opinion,” quoted in Burgin, The Return of Laissez Faire, pp. 186-87.

  121 Maurice Allais to Friedrich Hayek, May 12, 1947, quoted in Burgin, p. 189.

  122 Hartwell, A History of the Mont Pèlerin Society, chapter 5.

  123 For the clash of Popper and Hayek, see Vernon, “The Great Society and the Open Society”; Kukathas, Hayek and Modern Liberalism; for the rejection of Popper on science and knowledge, see Lakatos, Criticism and the Growth of Knowledge. This question has some bearing upon the attempt by George Soros to profess Popperian principles in his new organization INET and its response to the crisis.

  124 Popper, The Open Society and Its Enemies, p. 265; Popper, After the Open Society, pp. 137, 239.

  125 Quoted in Hartwell, A History of the Mont Pèlerin Society, p. xiv.

  126 Buchanan, Ideas, Persons and Events, p. 211.

  127 See Friedman and Friedman, Free to Choose and Two Lucky People; Friedman, Bright Promises, Dismal Performances. The position of James Buchanan (Ideas, Persons and Events, pp. 210–20) was only a slightly different variant, suggesting that the populace had to be tutored in the “elementary principles of [economic] science” to embrace the neoliberal position.

  128 Friedman and Samuelson Discuss the Responsibility of Government, p. 13, gives a nice short example of his style: “I have often challenged audiences to name a significant program of government intervention intended to distribute income from high to
low incomes, which succeeds in so doing.” The television series funded by the Neoliberal Thought Collective on PBS, Free to Choose, provides many more.

  129 Mirowski, ScienceMart; Thorpe, “Political Theory in STS”.

  130 Hayek, “The Intellectuals and Socialism”; Burgin, History, p. 194; Hayek, Law, Legislation and Liberty, chapter 2.

  131 The response of Caldwell, “The Chicago School, Hayek, and Neoliberalism,” to this criticism is a good example of the unwillingness to explore this issue.

  132 Hayek, Law, Legislation and Liberty, pp. 45–46.

  133 Ibid., p. 51.

  134 Zingales, A Capitalism for the People.

  135 Conversation among Friedman, Director, and Craig Freedman, August 1997; reported in Freedman, Chicago Fundamentalism, p. 12.

  136 Stigler, “The Intellectual and His Society,” p. 312.

  137 “The large mass of the public does not find it economically worthwhile to become well acquainted with the effects of policies which have small harmful effects upon each non-beneficiary.” (George Stigler, unpublished paper “Schools in Science,” quoted in Nik-Khah, “George Stigler, the Graduate School of Business, and the Pillars of the Chicago School,” p. 140)

  138 Some evidence supports Stigler’s position: in a number of countries, it was explicitly socialist parties that introduced some of the most critical neoliberal reforms. See Ban, Neoliberalism in Translation; Zuidhof, Imagining Markets.

  139 Nik-Khah, “George Stigler.” See also his forthcoming work on the role of Stigler in building a defense of the pharmaceutical sector against the FDA.

  140 Parts of this section have previously appeared in Mirowski, ScienceMart.

  141 Hayek, The Constitution of Liberty, p. 29.

  142 Ibid., p. 110.

  143 Ibid., p. 3; Arnsperger, Critical Political Economy, p. 90.

  144 Hayek, The Road to Serfdom, p. 164.

  145 Hayek, The Constitution of Liberty, p. 376; Hayek, The Road to Serfdom, p. 77, 30, 290–91. What is regarded as wickedly radical in science studies, is propounded as eminently conservative by the Hayek wing of neoliberalism.