A review of Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics by Daniel Stedman Jones (2012, Princeton University Press).
I approached this long awaited volume (I was interviewed in 2007!) with great anticipation and a little trepidation. After all the credit for the famous photo of Friedrich Hayek on the front cover (along with Friedman, Thatcher and Reagan) reads: ‘Frederick von Hayek (double sic) 2009 (died 1992) courtesy of the Ludwig von Mises Institute’. Utter gibberish. But fortunately the book – as opposed to the cover – does not get an F but more of a C++.
Broadly the 345 page text (plus 73 pages of end material) tells the story of the rise of neo-liberal free-market ideas post World War II to their ascendant position post the debates of the 1970s under Thatcher and Reagan and beyond. Trans-Atlantic cross-fertilisation is a major theme.
Large parts of the book are well written history with no personal idiosyncractic asides and I single out the post-WWII discussion which stretches from pages 30 through 84 and say Chapters 5 and 6 on the emergence of monetarism and the way market ideas broke through in the 1970s.
The author is often spot on in interpreting the strategies deployed - for example the way the IEA cultivated a handful of key journalists and (not mentioned here) eschewed personal media appearances.
But it is a book of two halves, albeit the halves are intermingled and the joins not immediately apparent.
I strongly suspect that the excellent sections, three of which I highlight above, were written as part of a Master’s or PhD thesis. They are robust, well written and pretty much free of error or spin.
Then there is the rest of the book full of clangers, howlers and bizarre unfounded statements out of left field. It is as if a publisher asked for a thesis to be turned into a trade publication (albeit from a University Press) and that the new material was not written to the same standard as the existing text. There are even internal inconsistencies: he describes the IEA and FEE missions accurately in the good parts and inaccurately in the less good sections!
The clangers and howlers are so frequent and egregious I would need pages to list them, but Hayek starting MPS and becoming its leader because he was great at fundraising and organising, and Coase, who could not say boo to a mouse let alone a goose, getting the Nobel because of his self-promotion skills are just plain risible. And there are many more such.
As well as the good passages highlighted above I must mention the frequent and substantial indented quotes the author has gleaned from his prodigious archive work. Just reading them and many of the footnotes (e.g. Samuelson’s letter to Hayek) is a real joy and an education. Just ignore the utterly bizarre one which has FEE inspiring Hayek to start MPS and later the establishment of IHS and the IEA.
The book ends bizarrely. An interesting sub theme throughout is the trans-Atlantic cross-fertilisation of ideas which I welcomed as I have been involved in that directly for nearly 40 years. At times he gets it right but then the penultimate section (Chapter 7) focuses way too much on one person, namely Stuart Butler, and two ideas, namely council house sales and Enterprise Zones. At best I think it fair to say while sales of public housing units were a huge hit in the UK they were a miserable flop in the US and that Enterprise Zones were badly flawed and/or neutered and have really not amounted to much overall on either side of the Atlantic. Jack Kemp’s visit to London to see the success of the Right to Buy is portrayed as a boondoggle to watch a pre-season American football game so maybe it is not at all surprising the policy failed back home!
On the other side of the coin there is no thorough discussion of Reagan/Thatcher tackling union issues and high marginal tax rates - both to great effect - or of Bob Poole’s monograph Cutting Back City Hall published in California by the Reason Foundation which led directly to contracting-out spreading like wildfire in the UK.
By 2001 we (‘the neoliberals’) had ‘won’ but the financial crisis of 2007-2008 is ‘the apotheosis of the neoliberal faith in free markets’. Apparently, it is nothing to do with lax monetary policy, completely flawed international banking regulation, an oligopoly of ratings agencies certified by US regulators, the successive bailing out of US financial institutions over decades, or government intervention in the housing and mortgage markets. At least there should be a debate about these things. In any case, what’s his answer? ‘Reason-based policy making needs to return.’ Return? Return from where?
My grade of C++ is perhaps on the generous side but then research has shown convincingly that free market types are much more generous than those left of centre.
John Blundell is the IEA’s Distinguished Senior Fellow and a Visiting Fellow at The Heritage Foundation in Washington, DC. His latest book is Ladies for Liberty: Women Who Made a Difference in American History.