The Liberalizers: Justifying Free-Market Finance

Chapter 5 traces how free market ideology displaced the apparent consensus on economic regulation that emerged from the Depression, the New Deal, and the Second World War. Viewed as cranks within economics through the 1960s, Milton Friedman and his supporters built an apparatus of ideas, publications, students, think tanks, and rich supporters, establishing outposts in Latin America and the UK. When developed economies faltered in the 1970s, Friedman’s neoliberal doctrine was ready. With citizens, consumers, and workers feeling worked over by monopolies, inflation, unemployment, and taxes, these strange bedfellows elected Reagan in the US and Thatcher in the UK and rolled to power in academia and in public discourse with a doctrine of privatization, liberalization, and deregulation. Friedman, Eugene Fama, and James Buchanan whose radical free market views triumphed at the end of the 1970s are profiled. A technical appendix, “Skeptics and Critics vs. True Believers” explores the economic debates.