The Roots Of Neoliberalism

Abstract

The modern version of liberalism began under Thatcher and Reagan, who provided the political basis for Milton Friedman's triumphant declaration of the 'neoliberal counter-revolution' following the crisis of the Keynesian state in the West, the dismantling of the 'planning state' in the South, and the collapse of the planned economies of the East. However, the roots of neoliberalism go back much further than the past thirty-five years. Some of the most striking ingredients of neoliberal theoretical approaches can be traced back to the origins of liberal thinking in the early 18th century, to Adam Smith, David Hume, Bernard de Mandeville, etc. In the 'fable of the bees' Mandeville even tried to show that private vices turn into public virtues, and that competition in free markets also produces social equilibrium (later formulated mathematically by Leon Walras, Vilfredo Pareto and in the vast literature on their 'optima'). Long before Fukuyama's famous statement about 'the end of history', after the demise of 'actually existing' socialism, Antoine- Augustin Cournot was saying much the same thing when he argued that since such 'optima' are the outcome of economic processes there is no need to change the political order and its ruling principles.