From David Harvey's A Brief History of Neoliberalism
Part 8 – By 2000, corporate power restored to the 1920s levels through the rationalization of the fundamentally irrational neoliberal principles
All of this demanded some rationale, and to this end the war of ideas did play an important role. The economic ideas marshalled in support of the neoliberal turn amounted, Blyth suggests, to a complex fusion of monetarism (Friedman), rational expectations (Robert Lucas), public choice (James Buchanan, and Gordon Tullock), and the less respectable but by no means uninfluential ‘supply-side’ ideas of Arthur Laffer, who went so far as to suggest that the incentive effects of tax cuts would so increase economic activity as to automatically increase tax revenues (Reagan was enamoured of this idea).
The more acceptable commonality to these arguments was that government intervention was the problem rather than the solution, and that ‘a stable monetary policy, plus radical tax cuts in the top brackets, would produce a healthier economy’ by getting the incentives for entrepreneurial activity aligned correctly.
The business press, with the Wall Street Journal very much in the lead, took up these ideas, becoming an open advocate for neoliberalization as the necessary solution to all economic ills.
Popular currency was given to these ideas by prolific writers such as George Gilder (supported by think-tank funds), and the business schools that arose in prestigious universities such as Stanford and Harvard, generously funded by corporations and foundations, became centres of neoliberal orthodoxy from the very moment they opened.
Charting the spread of ideas is always difficult, but by 1990 or so most economics departments in the major research universities as well as the business schools were dominated by neoliberal modes of thought. The importance of this should not be underestimated. The US research universities were and are training grounds for many foreigners who take what they learn back to their countries of origin –– the key figures in Chile’s and Mexico’s adaptation to neoliberalism were US-trained economists for example –– as well as into international institutions such as the IMF, the World Bank, and the UN.
The conclusion is, I think, clear. ‘During the 1970s, the political wing of the nation’s corporate sector’, writes Edsall, ‘staged one of the most remarkable campaigns in the pursuit of power in recent history.’ By the early 1980s it ‘had gained a level of influence and leverage approaching that of the boom days of the 1920s’. And by the year 2000 it had used that leverage to restore its share of the national wealth and income to levels also not seen since the 1920s.