In CRB's Spring 2013 issue Steven Hayward reviewed Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics by Daniel Stedman Jones and The Great Persuasion: Reinventing Free Markets since the Depression by Angus Burgin. Mr. Stedman Jones, a barrister in London who received a Ph.D. in history from the University of Pennsylvania, has kindly agreed to participate in this online discussion of his book. One of the discussants will be Mr. Hayward, a fellow of the Claremont Institute and visiting scholar at Colorado University Boulder. The other discussant will be Nigel Ashford, senior program officer at the Institute for Humane Studies at George Mason University.
Daniel Stedman Jones: I should begin by saying that Steven Hayward's review of my book in The Claremont Review of Books is a welcome critical response to my own work, and that of Angus Burgin, a historian at Johns Hopkins University. He has engaged with our attempts, some of the first written from the perspective of historians of the United States, to grapple with the rise of transatlantic neoliberalism since the 1930s. However, in his treatment of my own book, notwithstanding political disagreements real or imagined, Mr. Hayward has ignored several of the central issues with which the book is most concerned.
The first of these themes, and one that partly separates mine from Burgin's excellent account, is the political application of neoliberal ideas. This subject is the reason why the book begins in the 1940s and addresses German, as well as British and American neoliberalism. It is also the reason why the book is not focused on the Mont Pelerin Society ("the MPS"), whose undoubted importance as an originator and bearer of neoliberal thought is well explained by Burgin and other accounts, such as the valuable contributions contained in the collection, The Road from Mont Pelerin, edited by Philip Mirowski and Dieter Plehwe.
Instead, my account seeks to examine the imperfect and messy political application of neoliberal ideas. In other words, how did a set of academic ideas translate into policy? In order to trace how this occurred in relation to neoliberal ideas, the book is split roughly into two. The first chapters examine the intellectual components that became crucial to the later attack on the New Deal and Social Democratic Europe. There were many such ideas, of course, including some of greater import perhaps in the specifically American context of anti-New Deal, right-wing, and conservative activism, but the book focuses on three in particular. These were Friedrich Hayek's critique of economic planning in The Road to Serfdom, Karl Popper's attack on the bases of collectivist thought in The Open Society and its Enemies, and Ludwig von Mises's pamphlet denuding the insidious effects of government management, Bureaucracy. Chapter Three looks at the distinctive contributions of the Chicago School of Economics and the Virginia School of Political Economy to a more policy-friendly application of free market thinking.
The second half of the book reveals the percolation of these academic and polemical critiques of liberal collectivism and illustrates a second major theme unnoticed by Mr. Hayward in his review, the transatlantic nature of neoliberal politics. This goes well beyond clichés about Maggie, Ronnie and the Cold War. Instead, the transatlantic connections uncover crucial aspects of the history of conservatism and the rise of the Right in both the United Kingdom and the United States.
These differences are best revealed in the book's two case studies. The first is macroeconomic strategy and the shift from Keynesian demand management to a monetarist approach in the 1960s and '70s. The second is one of the very few areas of social policy where neoliberal advocates attempted a proactive agenda during the 1980s with any success: urban policy and affordable housing.
Hayward suggests that these chapters reflect the "strangeness" of the book. However, the economic chapters reflect arguably the most important political application of neoliberalism of all, that of monetarism, which had a complicated genesis in both countries. Urban and Housing policy, meanwhile, were chosen because they provide a useful example of policy exchange between transatlantic neoliberals. The fact that Enterprise Zones were a successful import and the privatisation of housing was not is reflective of important cultural, political, and historical differences between the United Kingdom and the United States. The New Deal never created as comprehensive or as complete a welfare state as did the combined efforts of the Liberal and Labour Governments in Britain. In terms of housing, this meant that the focus of Thatcherites in Britain was on the large-scale social and public provision of council housing, whereas in the United States the focus was on racially-scarred and lost slum neighbourhoods in desperate need of renewal. Such nuances, and distinctive differences, between the two counties created divergent priorities in reforming efforts on either side of the Atlantic. The comparative perspective is therefore highly instructive.
The third important aspect of the book that was largely missed in Mr. Hayward's review is the development of neoliberal thought and politics itself over the course of the last 80 or so years. Through its transatlantic lens, the book examines the changing nature of neoliberal politics. Here was a set of ideas that travelled from interwar Europe and a preoccupation with the twin totalitarian disasters of Nazism and Stalinist Communism to the vastly different context of a prosperous postwar United States, dominated by the Cold War.
Neoliberal ideas as they developed in the 1950s become shorn of Hayek's willingness to accept a basic welfare state inThe Road to Serfdom (Popper and the Germans had also shared such a willingness to compromise). Indeed, Hayek himself was only half welcomed by his fellow economists at Chicago after 1951. He was kept at some distance from the Department of Economics by his appointment to the Committee of Social Thought. In the Free Market Study Group led by Aaron Director (Milton Friedman's brother-in-law) the Chicago School moved away from Henry Simons and the German neoliberals' focus on anti-trust regulation. Instead, the conditions for competition were to be replicated in large firms that would defeat monopoly, and government regulation was held to be the problem rather than an important guarantor of the competitive marketplace.
This history shows important shifts. The early neoliberal preoccupations was with developing a third way between laissez-faire and the interventionist liberalism of FDR's New Deal and the British Edwardian Liberal governments of Asquith and Lloyd George. This gave way in the Chicago and Virginia versions to a wide-ranging critique of the welfare state and a clear advocacy of market mechanisms to be applied in all policy areas, a process often disparagingly known as "economics imperialism."
My book is an attempt to understand both how this development occurred and its important effects. The "radical" epithet I use for neoliberal ideas as they were honed and sharpened in Chicago and Virginia during the 1950s and '60s is merely meant to emphasise the breadth and depth of the transformation of free market ideas. It is meant as a description rather than a criticism. In my view, it is undeniable that neoliberal ideas became radicalized.
Notwithstanding Mr. Hayward's disagreement with some of its conclusions, the book's aim was to take neoliberal ideas and their success seriously. This task engendered no little respect on my part for the clarity and rigour of some of the most persuasive neoliberal thought. I was also struck by the power of certain policy insights, especially in terms of the operation of government bureaucracy and regulation. However, the irony in the title, Masters of the Universe, must not be missed. Hayward hits on the problem himself when he points out that Hayek understood the limits of human-driven policymaking. Policymakers and financiers alike felt they understood the world to be driven by markets that would self-correct. This proved to be a complacent and hubristic belief.
Steven Hayward: Daniel Stedman Jones has some reason to complain that I did not fully address the scope of his book in my relatively short review (especially his inclusion of the German roots of "neoliberalism"), and to the extent that there is much in his response that I can agree with, it is tempting to repair to the old simile of two trains passing in the night—except that here in America our rail lines often converge on a single track, assuring a head-on collision eventually. Such is the case here.
One reason for not recounting or critiquing Jones's broader history of neoliberalism—and especially its most prominent feature, monetarism—is that his account is thorough and, as far as I know, largely error-free, as is his case study of the embrace of monetarism on both sides of the Atlantic. Here and there I can pick nits that, when summed up, can explain my many American readers will nonetheless react as I did to the book. One small example is Jones's characterization of George Nash's The Conservative Intellectual Movement in America since 1945 about conservative intellectuals for laying bare the contradictory character of the "New Right"—an overbroad and inaccurate shorthand I find typical even of British authors who sympathize with American conservatism such as my pals at The Economist. (To be sure, it is a confusion shared by many American observers, too, such as the left-leaning dust-jacket blurbists for Jones's book, Eric Foner and Sean Wilentz.)
And though I agree that examining "the imperfect and messy political application of neoliberal ideas" is the most suitable focus of any treatment of the subject, I'll double down on finding housing policy to be one of the least important arenas of neoliberal thought in America, on account of the asymmetry of the nature of housing markets on either side of the Atlantic, and the fact that housing policy was a largely ancillary focus of American neoliberals—and I'll include Hayek among "Americans" for our purposes here. (Much better in my mind would have been a comparison of industry privatizations or deregulations—such as telecommunications, energy and transportation—where the asymmetries between the kind and scale of public goods privatized or de-regulated on both sides of the Atlantic offer a much better window into the core substance and results of neoliberal economics.) To be sure, although the famous "Roofs or Ceilings?" essay attacking rent control by Milton Friedman and George Stigler is widely celebrated by American neoliberals, rent control was and remains a minor and localized phenomenon here, while America's public housing, as Jones correctly notes, was never program aimed at the middle class, but was largely part of our poverty policy. Likewise it is hard to find many American neoliberals today who think that "Enterprise Zones were a successful import."
I think Jones ironically misses a major opportunity here, in part by not considering the issue broadly enough and pressing on the lack of in-depth thought about housing and planning in the works of neoliberals, especially Hayek. While Jones's policy history is very good, he might have made more out of Hayek's lonely and undeveloped chapter on "Housing and Town Planning" in The Constitution of Liberty. Jones perceptively quotes a key passage from that chapter where Hayek postulates a contrast between market outcomes and planned outcomes, but the rest of the chapter drifts off mostly into a critique of rent control and public ownership of housing. Neither Hayek nor his followers have ever dilated the significant challenge of planning versus markets either in England, which has a juicy target in the 1947 Town and Country Planning Act, and still less in the United States, where with the exception of states like Oregon and Vermont, a similar planning policy has never taken root.
As for examining "messy" applications of ideas, it hardly gets any better than this significant lacuna in neoliberal thought, and here is where neoliberalism deserves to be pressed a lot harder. In a passage that appears a page before the passage Jones cites, Hayek writes:
In many respects the close contiguity of city life invalidates the assumptions underlying any simple division of property rights. In such conditions it is true only to a limited extent that whatever an owner does with his property will affect him and nobody else. What economists call the "neighborhood effects," i.e., the effects of what one does to one's property on that of others, assume major importance. . . The general formulas of private property or freedom of contract do not therefore provide an immediate answer to the complex problems which city life raises.
I sometimes read this passage to neoliberals without revealing the author, and I often get the predictable response: "What socialist said that!?" Hayek never did get around in his subsequent work to answering his own challenge.
Jones might reply with some justification that his book is largely a history and not a substantive critique of the intellectual problems of neoliberalism. That would be fair enough except for the judgments in the end that are in no way established in the main body of his book, and which prompted me to find the book as a whole to be odd. Jones's summary account of the financial crisis and housing crash in the conclusion is eminently contestable, especially his claim that "the financial crisis was the direct result of neoliberal policies." I'll pass over the neoliberals who warned of easy housing money and perversions in the housing market as much as a decade before the crash, only to be summarily dismissed by Paul Krugman, Barney Frank, and others who today claim justification. Jones needs to produce a wholly separate book to justify this claim, which might start by revising his judgment that "Attempts to rebalance the scales have been scorned." Apparently Jones has not heard of Dodd-Frank (among other measures), a train wreck of a remedy that will crash on the tracks all by itself. Had Jones omitted his concluding chapter, which reads quite different from the rest of the book, Masters of the Universe might find wider embrace by part of the audience he would most wish to engage.
Nigel Ashford: As Daniel Stedman Jones is a participant to this discussion, let me deal first very briefly with Angus Burgin. Burgin is clearly the more superior academic work of the two. It is more thoughtful, balanced, and nuanced and non-ideological. He does a superb job of explaining the significance of the Mont Pelerin Society and of Milton Friedman. Stedman Jones is the weaker book because of its ideological tone, which undermines its considerable merits. I use the term "ideological" deliberately, because the author wishes to uses it as a weapon to dismiss his opponents while failing to recognize his own ideology of rule by technocrats with superior knowledge, certain that their conception of the common good is the only one, and with the pretense of having no personal interests.
Both authors misunderstand the debate between Friedman and Hayek (and libertarians in general). It is not one of radicalism versus moderation, but of methodology. The question of how do you decide what is the appropriate role of government is prior to the what. Friedman favored an empirical, positivist approach, with economics as the queen discipline while Friedrich Hayek had a more evolutionary or cultural approach and felt that economics is not enough. Ludwig von Mises, for example, was more radical than either of them in favoring a minimal state, but was much closer to Hayek in his critique of neoclassical economics. Mises had a different methodology based on axioms or truths, such as the subjective theory of value. Public choice was based on a social contract theory, while Rand and Nozick were natural rights theorists.
Friedman and Hayek are rather close to each other in terms of the type of state that would justify, a market-oriented welfare state with a social safety net. The role of government is to protect us from our enemies, domestic and foreign (police, military), to provide a neutral means for the resolution of conflict (courts), the provision of public goods and the reduction of negative externalities, and protection for those unable to make decisions for themselves, such as children. They were both central in claiming that trade unions benefited form special privileges, and were harmful to the social good. When he did differ, Hayek was often more radical for example in support of competing currencies. Among libertarians, Friedman and Hayek are viewed on the more conservative end of the spectrum in contrast to minimal statists and anarcho-capitalists.
What is the relative importance of Friedman and Hayek is a contrast between Burgin and Stedman Jones? Stedman Jones gives much more attention to Friedman, who did have much more influence in contemporary political debate, but Burgin is more accurate in suggesting that Hayek will have the longer-term impact.
Although critical of Stedman Jones, I disagree with Hayward that he shows no respect. When he is descriptive, his analysis of close attention and intense referencing is usually excellent. For someone trying to understand the arguments of libertarians, he provides a reliable summary.
The best feature of Stedman Jones is that he demonstrates the power of ideas, inspired by the dispassionate search for the truth, even if always partially grasped. This is in marked contrast to so much commentary on the Left, who views these intellectuals as simply a mouthpiece for business interests, and therefore not worthy of intellectual rebuttal. One question should be why the vast majority of businessmen fail to contribute to the cause of economic liberty, and often prefer to try to buy off the Left. I think there are two reasons. First, many businessmen do not believe in free markets, but are rent seekers in an increasingly crony capitalist world under President Obama, who is better described as a corporatist than a socialist. Second, it is easier for businessmen to seek to buy off potential opposition (see the payoffs given to Jesse Jackson or environmental groups as documented by the Capital Research Center) than to face the media spotlight when you display support for libertarian or conservative causes.
A second virtue is the detailed descriptions of the terrible state of affairs both the U.S. and the U.K. in the 1970s—of both high inflation and unemployment. Those who are highly critical of the methods used by Ronald Reagan and Margaret Thatcher fail to acknowledge the dire straits of the economies they inherited. There was an extensive debate on the economic contradictions of democracy when commentators discussed whether the entrenched democratic system was compatible with economic growth. Mancur Olson, for example, identified the role of special interests in the decline of nations.
The third theme is that these ideas had a significant impact on policy but it was "messy." No administration was faithful to the policy prescriptions of the libertarians, not Reagan and Thatcher nor their predecessors Jimmy Carter and James Callaghan, or successors Bill Clinton and Tony Blair. All these governments were strongly influenced by these ideas, but only to a limited extent. The limit of influence was a theme of a volume I co-edited with Grant Jordan on Public Policy and the Impact of the New Right. For example, the chapter on housing and urban renewal (which Stedman Jones does not cite in his chapter on this policy area) concludes that policies were a combination of "incremental policy making partial assimilation of new right ideas, and anti-bureaucratic impulses." However, Stedman Jones cannot have it both ways. Was it a rigid and unthinking application of libertarian policies (as Stedman Jones implies), or a mixture of ideas and politics, in which libertarian proposals were ignored, distorted, or only partially implemented? The gap between the rhetoric and the reality was considerable. The Reagan and Thatcher years were no libertarian paradise.
Stedman Jones: Nigel Ashford raises a challenge in respect of the interpretation of neoliberalism in my book, Masters of the Universe: "Was it a rigid and unthinking application of libertarian policies (as Stedman Jones implies), or a mixture of ideas and politics, in which libertarian proposals were ignored, distorted, or only partially implemented?"
The influence of neoliberalism, especially as clarified and sharpened in the seminar rooms of the Chicago School in the post-war era, did lead to two interrelated changes. Some neoliberal ideas were applied, and neoliberal thought and priorities helped to foster a wider change in the political culture. These developments mixed with each other to produce complex and commingled effects.
Like Progressive, Keynesian, Fabian, and New Deal ideas in the first half of the 20th century, new ideas about the dangers inherent in economic regulation or demand management in the 1960s were initially introduced in particular policy sphere to correct failing models. Monetarism and deregulation were available alternatives, seized upon by desperate policymakers in the 1970s. But the free market agenda of Chicago and Virginia theorists was not imported wholesale into mainstream politics at the same time. Instead, two policy innovations coalesced with the New Deal state. Friedman's characterisation of politics as being rhetorically conservative and practically still tenaciously socialist by the 1980s was close although Europeans would object to this use of the word socialism.
Keynes's General Theory of Employment, Interest and Money (1936), whatever one's view of its merits, was welcomed with open arms because it enabled policymakers to do something at a time when economic advisers looking for a way out of entrenched depression. By contrast, the promise of monetarism soon dissipated. It turned out that the relationship of inflation to the money supply was more complicated than Friedman had allowed for. A new politics instead found its voice in the introduction of a more strident agenda of supply-side reform. The Reagan and Thatcher "revolutions" took hold through tax cuts and deregulation. The tax revolt of the 1970s, strongly supported and encouraged by Friedman, had been the harbinger of new economic policy debates, from the first Reagan Administration to the Bush tax cuts of 2001 and 2003, and beyond. In Britain, the Conservatives under Lawson and Thatcher progressively brought down marginal tax rates from their absurd high of 98% for upper earners to a top rate of 40%. In both countries, it became largely impossible to mount successful arguments in favor of public spending, especially on welfare.
These policy reforms revealed a related major effect of neoliberal influence. Assumptions about the superiority of markets began to dominate political culture in the way that the War on Poverty or full employment had in a previous generation. Market models have often not in fact been introduced into particular sectors. Health and education have been relatively immune. Vouchers, for example-one of Friedman's most important ideas-did not take hold. Healthcare has meanwhile been a complete mess of cartelization, perverse incentives and limited public intervention which has hindered the accessibility of high quality care to all. But the culture of deregulation did lead to one catastrophic failure, ironically in large part perpetrated by parties and politicians of the nominal Left as well as the Right, and that was financial deregulation.
It may be that this failure is just as much a failure of government as it is a failure of markets but it does illustrate, in my view, some of the consequences when markets are left untrammelled. This touches on Hayward's point that business is not usually pro-market. Left alone, the banks pursued excess profit to the point of collapse. The move in Chicago neoliberalism away from the early neoliberal belief, evident in the ideas of Henry Simons or the German Freiburg School, that the state had an important, if limited, role in regulating the conditions for competition in a social market economy was crucial to the culture of deregulation which led to the disasters of 2008.
The second issue I want to address briefly is the relative importance of Hayek and Friedman. I agree that Hayek was the deeper, more enduring thinker. His ideas engaged with complex problems associated with neoliberal success, with which we are still grappling. If one cultural weakness of the liberal Left was its seeming obliviousness to the necessity and virtue of individual responsibility in driving forward social and moral growth, the neoliberal-influenced economic policies of Thatcher, Reagan, Clinton, and Blair produced just as profound a legacy: inequality and stagnant incomes for the working poor and the middle class. Hayek himself was deeply ambivalent and worried about the moral and cultural impact of market capitalism on the Judeo-Christian civilization that he cherished. Hayek's concerns proved particularly prescient in the context of the modern United States in which the culture wars and the breakdown of traditional family life witnessed over the last 40 years, themselves partly legacies of the disruptive trends of international market liberalization and globalization, have been fought over with increasing venom.
Ashford: In the previous comment, I praised Masters of the Universe for its detailed description of the neoliberal critique of the post-war consensus and crisis of the 1970s. Alas, I can't say the same about its normative analysis. Like Hayward, I was disappointed (as would be any serious reader) by the constant use of unsupported pejorative adjectives. Can these really have been included in his dissertation, or have academic standards slipped at the University of Pennsylvania?
Stedman Jones tries to blame the current economic crisis on the policies of the Reagan and Thatcher Administrations. Twenty years mysteriously disappears from the book. There is no mention that those administrations were followed by high levels of growth, low levels of inflation, and high employment. The success of neoliberal reforms were recognized by their embrace by New Democrats under Clinton, and New Labour under Blair.
He repeats the dominant narrative that it was "free markets and deregulation" that caused the Great Recession. Stedman Jones acknowledges that there may be an alternative narrative, but he fails to describe it in any detail. Neither does he provide any references to allow the reader to explore that explanation.
The main alternative neoliberal explanation for the Great Recession (though there is more than one) is that the banks were encouraged by deliberate government policies to make loans on risky subprime mortgages. The most important factor was the role of the state sponsored enterprises, Freddie Mac and Fanny Mae (with their implicit government backed guarantees), which purchased 40% of them with the message that they were willing to buy more. Another factor was the Community Reinvestment Act, which threatened legal action against banks that did not lend to the poor-especially minority-mortgage lenders. The likelihood of successful prosecution was probably less important that the bad publicity that would result from accusations of racism.
Some neoliberals note the obscure international banking regulation, under the Basel II agreement, which pushed banks away from business loans to housing lending because it did not require the same level of capital adequacy requirements. "Fair value" accounting standards forced banks to downgrade the value of their capital investments and thus made them look much more vulnerable. The Federal Deposit Insurance Corporation also encouraged housing lending by assuring banks they were a safe investment. In other words the housing market was not one of free markets and deregulation, but a world of negative unintended consequences of multiple government actions. Bankers certainly made mistakes but they were following false signals created by government.
For those seeking an alternative explanation for the crisis, I recommend the new book The Financial Crisis and the Free Market Solution by John Allison. Allison, now president of the Cato Institute, was head of the BBT bank, and thus had direct experience of the pressures from government. Other authors to read are Peter Wallison of the American Enterprise Institute, John B. Taylor of Stanford, Jeffrey Friedman of Critical Review, and the late John Cochrane of Chicago.
Solutions will vary among neoliberals from modest to more radical. Friedmanite monetarists call for a return to fixed monetary growth and reduced discretion by the Federal Bank. Others call for a gold standard or other commodity based currency. Hayek himself argued for competition between currencies in The Denationalization of Money, with private companies offering currencies with a strong incentive to maintain the value of the currency if they were to retain users. Bitcoin may be the wave of the future. The power of regulatory bodies has be reduced or even abolished, including Freddie, Fannie, the FDIC, and the Federal Housing Administration. One of the saddest ironies of the response to the crisis is that Christopher Dodd and Barney Frank, who deserve much of the blame for the recession due to their protection of crony capitalist friends, were then given responsibility for fixing the mess in the monstrous Dodd-Frank Bill. Dodd-Frank needs to be repealed, as it is a significant factor in the recession's length and depth.
Stedman Jones concludes that the legacy of transatlantic neoliberalism is "faith based policy, rarely subject to detailed examination and criticism." This breathtaking claim ignores the avalanche of statist criticism that wrote the dominant narrative. He makes the absurd claim that the levels of inequality and deprivation are a return to the 19th century. Most worrying of all is his hostility to globalization. He fails to recognize that the greatest reduction of poverty in the history of the world has occurred since the introduction of modest neoliberal reforms in India and China. What is most bizarre (after reading his own book) is his confidence in government. One of the great insights of neoliberalism is that the existence of market failure does not itself justify government intervention. Market failure has to be compared to government failure, most notably in the areas of knowledge and incentives. Stedman Jones' "faith" in the omnipotent wisdom and concern for the common good displayed by government cannot be sustained "under detailed examination and criticism."
Hayward: My hunch is that the argument over the "story arc" of the Great Recession of the last decade is going to be more protracted than the historical debate over the Great Depression, in part because there are more aspects of causation to fight about, but mostly because there is more raw data to be picked over and sliced up. I'm with Nigel Ashford in holding that the role of government failure is much larger than the role of market failure (or heedless banks, which is not quite the same as market failure). I'll simply rest with my marker that what Stedman Jones calls "financial deregulation" more closely resembles the electricity "deregulation" that led to California's disaster around 2000 than genuine de-regulation: of course, it wasn't a real deregulation at all, but a botched re-regulation. Likewise, while many banking activities were indeed liberalized, it occurred in tandem with a plethora of new market distorting mandates, subsidies, and ruinous monetary policy that all contributed to the crash. Although I haven't crunched the numbers, I think a complete balance sheet would find that that even if the thesis that neoliberalism is wholly to blame for the crash of 2008 were proved true, the economic gains of three decades of market liberalization still outweigh the losses of the last five years by a substantial amount.
But as I say, this quarrel is going to be endless, and perhaps fruitless. It will be especially fruitless if the discussions of neoliberalism confine themselves, as I think Stedman Jones does, too narrowly to monetarism and broad categories of "deregulation." It is an ironic comment for Stedman Jones to say that "health and education have been relatively immune" to neoliberal market-oriented thinking. And which two sectors of American social and economic systems are thought the most poorly performing? Maybe there's a coincidence here. Vouchers "have never taken hold," yet school choice is slowly and steadily gaining ground against the most determined self-interested opposition that I doubt even Stedman Jones can convincingly defend. There is considerable empirical evidence of its effectiveness where it takes hold. Beyond the evidence, many parents-especially poor parents-passionately like educational market choice where is it tried, and freedom of choice ought to be sufficient justification even without compelling data.
Stedman Jones thinks the "complete mess of cartelization" and "perverse incentives" of American health care limits access because of "limited public intervention." It is precisely because of our "limited public interventions" (not all that limited really, even before Obamacare) that our health care sector is a cartelized, perverse mess. It would be more accurate to say that the U.S. has suffered from many of the defects of socialized medicine without its primary advantage of universal coverage.
This brings me to the most significant lacuna in both treatments of neoliberalism we've considered here. I am glad Stedman Jones agrees with me that Hayek was the deeper and more enduring thinker than Friedman. (I'll pass over here the claim that Thatcher-Reagan-Clinton-Blair neoliberal policies led directly to stagnant wages.) While Stedman Jones makes reference to Hayek's concern with the moral problems of democratic capitalism today, neither here nor in the two books is there much serious consideration given to Hayek's concern for political philosophy that became the central focus for at least the last third of Hayek's life. The Constitution of Liberty, Hayek's best and most important book, receives only short notice in Masters of the Universe and in Angus Burgin's The Great Persuasion. It is in Constitution that Hayek writes that "though I still regard myself mainly as an economist, I have come to feel more and more that the answers to many of the pressing social questions of our time are to be found ultimately in the recognition of principles that lie outside the scope of technical economics or of any other single discipline." Not only does Hayek's concern with what has been called "the knowledge problem" explain why, for example, Obamacare is crashing and burning on takeoff, but many parts of this 1961 book read like a Thomistic commentary on the comprehensive wrongheadedness of the Obama Administration. WhileMasters of the Universe and The Great Persuasion offer us both good and contestable history, we do a disservice to Hayek's memory, as well as his usable teaching, to overlook his paramount focus.