How the neoliberalism of ‘Hayek’s Bastards’ changed the world – and fuelled the rise of the populist right

Neoliberalism has had an enormous influence on the world, driving policy and governance at the national and international level, particularly since the 1980s, when it was championed by the Reagan administration in the United States and the Thatcher government in the United Kingdom.

It has been associated with programs of economic deregulation, privatisation of state-owned enterprises, massive tax cuts for businesses and high-income earners, reduction of social services and welfare programs, anti-unionisation, and the independence of monetary policy.

The movement’s intellectual heart was the Mont Pelerin Society, founded in 1947 by the Austrian economist Friedrich Hayek, who used the term “neoliberalism” into the 1950s. With the support of wealthy backers, neoliberalism became a global movement, its free-market principles promoted by a welter of influential institutes and think tanks.

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Review: Hayek’s Bastards: The Neoliberal Roots of the Populist Right – Quinn Slobodian (Allen Lane)

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In his new book Hayek’s Bastards, historian Quinn Slobodian explores the “neoliberal roots of the populist right”.

Neoliberalism is often described as a form of market fundamentalism: the view that, as Slobodian puts it, “everything on the planet has a price tag, borders are obsolete, the world economy should replace nation-states, and human life is reducible to a cycle of earn, spend, borrow, die”.

Slobodian suggests, however, that to understand neoliberalism as a “hypermarketization of everything” is “both vague and misleading”.

He builds on an expanding body of historical literature, which includes his previous works Globalists: The End of Empire and the Birth of Neoliberalism and Crack-Up Capitalism: Market Radicals and the Dream of a World Without Democracy. His focus in Hayek’s Bastards is a “new strain of the neoliberal movement that crystallized in the 1990s”.

The ‘new fusionism’

Slobodian calls this US-centred version of neoliberalism the “new fusionism”. He traces its influence on important factions on the contemporary right.

From the 1950s to 1980s, US conservatives often melded libertarian economic ideas with religious traditionalism. They drew on the language of religion to back up claims about immutable human differences based on gender, race and culture.

The “new fusionism” deploys the language of science to defend neoliberal policies. Taking their cues from evolutionary psychology, sociobiology, genetics and neuroscience, groups like the self-described “paleolibertarians” have sought to ground their claims on the “bedrock of biology”.

Slobodian helps us to see how important emerging factions on the Right are “mutant strains of neoliberalism”. Attention to the “new fusionism”, he suggests, helps to “clear up some of the confused framing of politics in the last several years”.

He challenges prominent narratives that describe populism and the alt-right in terms of a “backlash” against the forces of neoliberalism. The key figures in Hayek’s Bastards are not presented as “barbarians at the gates of neoliberal globalism but the bastard offspring of that line of thought itself”.

“Behind the abstract talk of liberties and freedoms in much of 21st century neoliberal and libertarian discourse,” argues Slobodian, “lies a much grubbier story of hunting and gathering, primordial beginnings, and adamantine differences.”

Better understanding of this, and of the visions of capitalism interwoven with these views, helps shed important light on “the mystique of evolutionary psychology in the work of right-wing gurus like Jordan Peterson”, the pronouncements of “so-called race realists on the radical right”, and the obsession with IQ among Silicon Valley techno-libertarians.

The Cold War: victory or defeat?

Slobodian writes interestingly about the 1990s and 2000s, when neoliberals might have been expected to be basking in the glory of having “routed their enemies, won the battle against communism, and conscripted international financial institutions to carry out their world-changing project”.

Instead, observes Slobodian, they “seemed to fear the Cold War had been lost”. The Soviet Union had collapsed and communism was defeated, yet “public spending continued to expand even as capitalism became the only surviving economic system”.

“In the democratic countries of Western Europe, the US, and elsewhere,” wrote neoliberal economist Gary Becker, “government control and regulation of economic activities is expanding, not contracting.”

“There weren’t any summit meetings in Washington about how to cut down the size of government,” lamented Mont Pelerin Society member Milton Friedman. Instead, there were “enormous increases” in what the neoliberals saw as paternalistic “statism”.

Key threats were identified as feminism, the civil rights movement, and supranational institutions, such as the United Nations and the European Union.

Neoliberals had initially viewed the European Union as promising: an institution with the potential to accelerate “competition between labour, product, and finance markets”. They came to view it as a “socialist Trojan horse”. It was, as German historian of science and Mont Pelerin Society member Gerard Radnitzky put it,

a European super-state […] on the road to more government and more bureaucracy, to creeping socialism and hence to less freedom and less growth.

Another new threat was environmentalism. “Having fought back a red tide, we are now in danger of being engulfed by a green one,” warned Fred Smith of the Competitive Enterprise Institute.

Many neoliberals believed that, as Mont Pelerin Society member Charles Murray wrote in the 1990s, “the last thirty years represent an aberration which goes against human nature”. They thought that, as Slobodian puts it, “decades of ‘collectivism’ and state dependency – even in the capitalist world – had eroded the virtues of self-reliance”.

The “mechanisms which existed prior to the welfare state and in some measure served to fulfill its functions are gone”, said Michael S. Joyce, the worried president of conservative funding body the Bradley Foundation.

This presented a serious problem. Joyce thought it unlikely that “the private sector and the free market [would] fill the gap instantly – like Athena sprung fully born from Zeus – thus replacing the welfare state and making the new order acceptable to our citizens”.

A painful transition out of the world of the social state was the only path to recovery.

A return to first principles

Against this background, neoliberals and libertarians in the 1990s argued that, as Slobodian writes, “it was necessary to return to first principles, to open a wide-ranging discussion on the human condition and the prerequisites for market order”.

This involved a shift in focus, away from purely economic issues. As neoliberals sought to ground their arguments in “something beyond the social”, they looked for scientific support for their core view that egalitarian politics and the social state went against “human nature”.

This “appeal to nature” was a central part of the neoliberal solution to the problem of expanding public spending.

Behind it, notes Slobodian, there was a political problem. The social movements of the 1960s and 1970s, the neoliberals believed, had “injected the poison of civil rights, feminism, affirmative action, and ecological consciousness into the veins of the body politic”.

They were, as Slobodian puts it, “confounded by persistent demands for the redress of inequality”. They experienced this as an oppressive atmosphere of “political correctness”. They felt it created “a culture of government dependency” and “special pleading”.

In their view, such demands came at the expense of productivity, innovation, efficiency, stability, and order. To combat them, intellectually and politically, they “turned to nature in matters of race, intelligence, territory, and money”.

Rethinking the conditions of capitalism

Slobodian suggests that changing demographics in the United States – “an aging white population matched by an expanding nonwhite population” – spurred some neoliberals and libertarians to “rethink the conditions necessary for capitalism”.

Extra-economic issues were traditionally addressed in neoliberal debates via a discussion of topics like law, religion and morality. The New Right, which would merge with the alt-right, developed in the direction of advocating an “ethno-economy”.

Proponents argued that certain cultures – and, for some, certain “races” – were “predisposed to market success”. Slobodian summarises their argument like this: “Some societies had developed the cultural traits of personal responsibility, ingenuity, rational action, and low time preference over long periods; others had not.”

The advantageous traits, these neoliberals believed, were not easily transplanted to “less culturally evolved societies”. Alongside this, many began to argue that “cultural homogeneity is a precondition for social stability, and thus the peaceful conduct of market exchange and enjoyment of private property”.

From this line of thinking sprang groups like the “closed borders” libertarians, who advocated free movement for capital and goods, but “drew a hard line against certain kinds of people”. Their demand for an ethno-state, writes Slobodian, was grounded in the demand for an “ethno-economy”.

Race and IQ

“Faced with the neoliberal problem of how to explain unequal capacity in a universal marketplace,” argues Slobodian, influential figures on the right “diverged from Hayekian arguments about social learning and cultural imitation”.

They seized on what they believed was the “objectivity of race science”. Relying on fringe work on IQ science, many adherents divided humanity into “cognitive classes”. Intelligence – measured by IQ – “became a central category for the new fusionists”.

In 1994, Murray and co-author Richard Herrnstein published The Bell Curve, which argued there was a link between “race” and “intelligence”.

The paleolibertarian Murray Rothbard, another Mont Pelerin Society member and a leading “new fusionist”, also saw differences as “rooted in biology and race as a rigid hierarchy of group traits and abilities”. There was, he thought, a “genetic basis for inequality of intelligence which undercut any attempts to create an equality of outcomes through education or redistribution”.

In the early 1990s, Rothbard outlined a strategy of what he called “paleo-populism”. Its aim was to use electoral democracy as a means of transitioning to a stateless society. Rothbard’s protégé Hans-Hermann Hoppe further radicalised his program. He vilified democracy as “the god that failed” and proposed “racial explanations for patterns of economic behaviour”.

Slobodian credits Hoppe with creating “forums for exchange between theorists of eugenics, ethnic secessionism, and Austrian economics”. Hoppe acted as a bridge from the US to “dissident [Mont Pelerin Society] members in Germany and Austria who sought to create their own alliances to the Right of the mainstream parties”.

‘Junk science yarns’

In their appeal to the “junk science yarns” about IQ and the “biological reality of race”, Slobodian’s neoliberals believed they had identified “a genetic basis for unequal capacity, unequal achievement, and in Hoppe’s work, an explanation for the supposedly natural aversion of races to cohabitation”.

The 2008 global financial crisis and its aftermath, argues Slobodian, “created the conditions for new mutations of neoliberal thought – as well as new schisms”.

In 2015, more than one million refugees arrived in Europe. With them came “a new winning political hybrid that combined xenophobia with free-market values”. In Germany, the racist right’s position was crystallized in Thilo Sarrazin’s book Germany Abolishes Itself, which sold more than 1.5 million copies.

Drawing on the same research as Murray, Rothbard and Hoppe, Sarrazin made the case for “race differences in cognitive capacity”. His “synthesis of free trade, independent monetary policy, and biological racism is the intellectual core of the insurgent Alternative for Germany (AfD) and Austrian Freedom Party”.

It is important to recognise, Slobodian emphasises, that these figures “did not propose the wholesale rejection of globalism but a variety of it, one that accepts an international division of labour with robust cross-border flows of goods and even multilateral trade agreements”, while “tightening controls on certain kinds of migration”.

The common view of neoliberals and the New Right is scorn for “egalitarianism, global economic equality, and solidarity beyond the nation. Both see capitalism as inevitable and judge citizens by the standards of productivity and efficiency.”

And yet, as Slobodian points out,

The parties dubbed as right-wing populist, from the United States to Britain and Austria […] offer few plans to rein in finance, restore a Golden Age of job security, or end world trade. By and large, the so-called populists’ calls to privatize, deregulate, and slash taxes come straight from the playbook shared by the world’s leaders for the past thirty years.

In other words, a lot of what we have been witnessing is a “family feud”.