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How neoliberalism manufactured consent to secure its unlimited power

From David Harvey's A Brief History of Neoliberalism

Part 3 - The corporate-backed institutions behind the rapid and artificial ideological transformation of the American society in favor of neoliberalism

In the US case I begin with a confidential memo sent by Lewis Powell to the US Chamber of Commerce in August 1971. Powell, about to be elevated to the Supreme Court by Richard Nixon, argued that criticism of and opposition to the US free enterprise system had gone too far and that ‘the time had come –– indeed it is long overdue –– for the wisdom, ingenuity and resources of American business to be marshalled against those who would destroy it’. Powell argued that individual action was insufficient. ‘Strength’, he wrote, ‘lies in organization, in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations’.

The National Chamber of Commerce, he argued, should lead an assault upon the major institutions –– universities, schools, the media, publishing, the courts –– in order to change how individuals think ‘about the corporation, the law, culture, and the individual’. US businesses did not lack resources for such an effort, particularly when pooled.

How directly influential this appeal to engage in class war was, is hard to tell. But we do know that the American Chamber of Commerce subsequently expanded its base from around 60,000 firms in 1972 to over a quarter of a million ten years later. Jointly with the National Association of Manufacturers (which moved to Washington in 1972) it amassed an immense campaign chest to lobby Congress and engage in research.

The Business Roundtable, an organization of CEOs ‘committed to the aggressive pursuit of political power for the corporation’, was founded in 1972 and thereafter became the centrepiece of collective pro-business action. The corporations involved accounted for ‘about one half of the GNP of the United States’ during the 1970s, and they spent close to $900 million annually (a huge amount at that time) on political matters.

Think-tanks, such as the Heritage Foundation, the Hoover Institute, the Center for the Study of American Business, and the American Enterprise Institute, were formed with corporate backing both to polemicize and, when necessary, as in the case of the National Bureau of Economic Research, to construct serious technical and empirical studies and political-philosophical arguments broadly in support of neoliberal policies. Nearly half the financing for the highly respected NBER came from the leading companies in the Fortune 500 list. Closely integrated with the academic community, the NBER was to have a very significant impact on thinking in the economics departments and business schools of the major research universities.

With abundant finance furnished by wealthy individuals (such as the brewer Joseph Coors, who later became a member of Reagan’s ‘kitchen cabinet’) and their foundations (for example Olin, Scaife, Smith Richardson, Pew Charitable Trust), a flood of tracts and books, with Nozick’s Anarchy State and Utopia perhaps the most widely read and appreciated, emerged espousing neoliberal values. A TV version of Milton Friedman’s Free to Choose was funded with a grant from Scaife in 1977. ‘Business was’, Blyth concludes, ‘learning to spend as a class.

In singling out the universities for particular attention, Powell pointed up an opportunity as well as an issue, for these were indeed centres of anti-corporate and anti-state sentiment (the students at Santa Barbara had burned down the Bank of America building there and ceremonially buried a car in the sands). But many students were (and still are) affluent and privileged, or at least middle class, and in the US the values of individual freedom have long been celebrated (in music and popular culture) as primary. Neoliberal themes could here find fertile ground for propagation. Powell did not argue for extending state power. But business should ‘assiduously cultivate’ the state and when necessary use it ‘aggressively and with determination’. But exactly how was state power to be deployed to reshape common-sense understandings?

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