Neoliberalism 4: Waiting For Thatcher

by Mike Goodman

In the beginning . . .

This installment begins with the 1947 conference and The Mont Pelerin Society’s inauguration completed (see “Neoliberalism 3” in this series), with agreement made that it be a think tank and have a duty to promote intellectual promotion of the ideas of freedom. One key point to bear in mind is that all participants were unanimously against the ideas of Keynes and against Communism, as well as any form of collective government.

New think tanks were to be established to the same end. Each think tank had a duty to completely educate people with the ideology of the Society. So they were, in effect, churches of neoliberalism evangelising the ideas of laissez-faire markets and border-free globalisation to a degree of religious fervour. It is estimated that more than 140 such institutions were initiated as a direct outcome of that conference, with many hundreds more over subsequent decades.


There was a lot going on away from the conference too. With American help ways were discussed among the previously warring nations of Europe about how to prevent future European wars. Interdependency is one obvious way and there was an equally obvious unanimity of interests in the coal and steel sectors of Italy, France and, especially, the huge industrial complex of the Ruhr Valley of (then West) Germany. If they could be brought together under a single, tariff free, collaborative trading alliance, the incentive for war between these three countries would be removed forever.

This was achieved, adding in Belgium, Luxembourg and Netherlands, under the auspices of the European Coal and Steel Community (ECSC) in 1951. It may well have appeared innocuous at the time. This confederation was, after all, an industry-specific agreement and there really was no need for all six governments to be involved in its running. It was a “common market” set up to be run by technocrats. Officially there were four institutions involved, a High Authority composed of “independent appointees” (technocrats), a Common Assembly composed of national parliamentarians who were to be completely superfluous, a Special Council without teeth composed of ministers from each nation, and a Court of Justice. The latter was effective and has survived to this day. As most cynics would call it in today’s terms, the ECSC was a democracy free zone.


The USA War Machine

By the end of WWII the USA had a huge standing army, navy, air force and marine corps. It also had a huge and newly enriched armaments and munitions sectors, commonly known as the industrial military complex, financially serviced by an equally bloated banking sector. Rich industries generate rich individuals with real political lobbying power and influence. New opportunities were soon to present themselves on the Korean peninsula. The armed forces were able to exercise their talents, at which they did not excel, and the armaments and banking sectors were able to make profits, at which they did.

Another “opportunity” was soon to reveal itself as The USA’s 20 year long diplomatic and financial involvement in Vietnam turned to war as the French pulled out in 1955. This confrontation lasted until 1975 when Nixon pulled the troops out. The winners once more, of course, were armaments, munitions and banking.

The reason for mentioning the American connection this early, even though it doesn’t really come into the story until later, is that this sets the scene for understanding where the money and the political power came from when the neoliberal activity became visible. At this stage we have no more than accusations of hidden agendas behind the wars, which were ostensibly to stop the spread of the Soviet Empire, to base opinions on. These wars of themselves did little to spread what is now called the American Empire.

USA, closer to home

The USA, throughout this time and beyond, did interfere greatly in the affairs of countries around the world but particularly those in Central and South America. The excuses ranged from helping a government, usually a right wing dictator perfectly happy to line their own pockets with US dollars in return for loyalty, to defend itself from rebel insurgency, or to help a “legitimate” government return to power after successful insurgency. It goes without saying, of course, the fallen government was that of another right wing dictator and the insurgents were left wing, labelled as communists whether or not they were.

If the country had natural resources American industrialists wanted to get their hands on, naturally there was always a reason to invade if the invitation to “help” was spurned. As often as not the invasion was carried out by indigenous people. The most notorious instance of all was in fact a neoliberal experiment conducted by Milton Friedman, economist of the Chicago School, 1947 conference attendee and founder member of the Mont Pelerin Society.

In 1970 Salvador Allende won the Chilean general election and became President. He was the first democratically elected Marxist president in the whole of South America. As we would expect, this was not a universally popular choice. As he implemented a programme of nationalisation and collectivisation the establishment, including the centre-right Christian Democrat party which had supported his election, turned against him and called for his removal. This was achieved by a CIA backed military coup in 1973 and Allende committed suicide.

General Augusto Pinochet refused to hand the country back to civilian rule and became the new military dictator, presiding over Chile until 1990. Not only was he CIA backed throughout but Friedman became economic advisor and used Chile as his economic laboratory. Economically it was successful. But at the cost of thousands of Allende’s actual or supposed supporters being murdered by the military, armed and trained by the CIA, in an absolute reign of terror.

Which leads us to . . .

When Thatcher was elected in the UK in 1979 she sought Friedman’s advice but was careful to warn that murdering of civilians would not be tolerated in Britain, neither by the general public nor by the establishment. Reagan followed her into a position of power, taking the USA Presidency in 1980. The Mont Pelerin Society membership, which had grown from an initial number around 50 to probably 3 or 400 by then, were rewarded for their long wait, by the introduction of neoliberalism into erstwhile democratic countries.

Of course, this is a quick skip over events during the long build up and patient awaiting of opportunity by the ever growing neoliberal movement between the 1947 conference and the elections of Reagan and Thatcher. There were more minor political successes prior to that and we shall cover them and their outcomes very briefly in the next article.

Author: Mike Goodman

Mike's main intersts are in economic policy, politics and current affairs. He has a degree in economics. He is retired now but still makes himself available occasionally for interesting speaking or training engagements. Leisure interests include rugby (the union code), cricket, music (especially modern to contemporary jazz), food, wine, good company or a good book.