Construction of Neoliberalism Economic Philosophy Towards Keynesianism

Neoliberalism is a reactionary economic philosophy to Keynesian economics that supported antistatism and minimal government intervention; however, neoliberalism lacks a clear mission and philosophy as it is a result of various reactionary scholarly camps which all lacked a practical vision in the specifics and application of neoliberalism yet managed to have an unlikely rise to promience via select elites in powerful positions due to support for their small government sentiment.

Peck documents the history of neoliberalism while also explaining the philosophy itself.

A large emphasis is placed on the development of the economic school, describing the stories of key scholars of neoliberalism such as Hayek, Polanyi, and Mises. Encompassing more than simple life stories, the chapter goes in depth on the discussions and ideas of these influencers and other prominent neoliberalist schools such as the Chicago School and Mont Pelerin Society. The author’s critical sentiments upon neoliberalism and its growth is made obivous as well.

Peck makes it obvious that the neoliberalism was birthed in a world which was heavily supportive Keynesian economics, largely due to the Great Depression and failure of laissez-faire economics.

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This made neoliberal scholars like Hayek the clear intellectual minority at the time, putting them in an unflattering light compared to major scholars at the time like Keynes. Peck identifies Vienna as one of the birthplaces of neoliberalism where Ludwig von Mises led the circle Geistkreis in discussions of classic liberalism in which Hayek adopts an iconoclastic liberal economic view. Hayek continues his teachings in England where he writes The Road to Serfdom, one of the most influential books on classic liberalism, in which he describes the direction of his liberal thought: “Planning and competition can be combined only by planning for competition, not planning against competition”.

The book was well-received publically and, to a certain extent, critically. Hayek’s sudden promience allowed him to gather a select diverse group of liberal thinkers: the Mont Pelerin Society. The Mont Pelerin Society became an influencial spot of liberal thought but, while principally consistent, they failed to establish an consensus upon an economic policy. Hayek moved to Chicago where the Chicago School caught his eye. The Chicago School, another difficult school to define, were heavily antistatism even at the cost of private monoplies. The Mont Pelerin Society and Chicago School had little overlap, a sentiment that Hayek felt whilst in Chicago as his ideas were not taken with the gravity he expected from Chicago economists who largely regarded them irrelevant.

Continental Europe had also undergone liberal changes post-war in West Germany. Ludwig Erhard, a Mont Pelerinian, had nearly eliminated all pricing regulation measures with dramatic tax cuts, creating an economic system with minimum state intervention. These measures lead to West German economic prosperity; regression to “the evils of bureaucratic intervention, welfarism...” lead to the rise of Ordoliberalism. Ordoliberalism embraced government intervention, but only in when in a market-conforming manner. It was differentiated from the social market economy which favored government planning in place of market forces. Ordoliberalists wanted government actors to create a structure in which to preserve economic freedom; a deliberate order that is leinient towards natural economic freedom. This German neoliberalism provided another vantage point of liberal economics.

The work of neoliberalists were long unappreciated. Influential scholars such as Mises and Polanyi found little support even till their last days. Both from their peers and followers, few backed their views. But, in 1974, Hayek’s Nobel Prize in Ecnomics symbolized as a turning point for neoliberalists. Later governments such as the Clinton administration implemented neoliberalist policies with the advice of the elite neoliberal minority, mainly through crisis and political influences. Hence, neoliberalism came into fruition despite the lack of a central binding philosophy. Despite lacking core values in what neoliberalists desired in practice and instead simply playing a contrarian to Keynesian economics, neoliberalism has become extremely relevent in modern day society. Its origins are far from singular and its development is the opposite of linear; neoliberalism is an opaque philosophy with no central value.

Peck’s account of neoliberalism is deeply informative; however, it does raise the question of whether it is exclusive. Peck places great emphasis on the fact that neoliberalism is fracture and is a synthesis of various strains of thought. Many other schools of thought, not just in the field of economics, have different sources or, at the very least, contested views and clash within their schools. Keynesian economics resulted in contesting schools as well such as Monetarism and the Stockholm School. Consistency does not seem to be a prerequiste to legitimacy or application. Neoliberalism’s roots may be murky but conflict within a large philosophy has little implications to be made. Even if neoliberalism may lack a clear definition, there are certainly themes such as minimal government intervention, market force priority, and antistatism that characterize the philosophy. Neoliberalism’s history does not seem to be particularly unique which leads me to question why neoliberalism is unique in the author’s criticism as well.