Ideology and Markets: Economic Theory and the 'New Right'

Abstract

The economic crisis of the capitalist world at the start of the 1980s has been matched by a determined shift in the ideology of economic policies. This shift, misleadingly abbreviated as a move from 'Keynesianism' to 'Monetarism', has accompanied the diverse 'new Right' policies pursued by Thatcher, Kohl, Nakasone and Reagan. Like all ideologies and policies, this shift is supported and promoted by academic arguments. Milton Friedman is an established theoretician who has become a media star popularising simple ideas in support of right-wing policies, but many others have concentrated on academic and specialised forums to promote new theoretical models. They are nonetheless effective for that, and in economics have succeeded in shifting the centre of debate. The success of the new Right in economics does not stem from the discovery of new truths (indeed, the theories date from the early days of modern capitalism with some new embellishments) but from their partial correspondence with the programme adopted by dominant sections of the bourgeoisie in these times. In this paper we discuss the character of the new economics, the sense in which it supports and promotes the policies of Thatcher and Reagan (although, we concentrate on Britain) and its relation to the particular set of capitalist interests they represent. We begin by outlining the main characteristics of the economic crisis and the dominant capitalist interests in the context of which Thatcher's economic policies have come to rule. We then outline how in three main areas of economic theory relating to these policies academics of the new Right have contributed to shifting the theoretical framework rightward; and we conclude by discussing the influence of theoretical work on ideology more generally.