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- [00:00]
Host
This is a bonus episode of history as it happens. It's December 22, 2025. What is neoliberalism? This word is often used as a pejorative to describe the global economic policies under the so called Washington Consensus that produced the unintended consequences of a hollowed out middle class, boom and bust cycles across the globe and other negative consequences. And those resulted in the populist wave, a backlash, the age of Trump, or so the argument goes. So what was the Washington Consensus? Low taxes, deregulation, austerity budgets, free trade, the unfettered flow of capital into and out of emerging markets, privatization of public assets, neoliberal globalization that left large parts of America behind. Again, this is how the argument goes. It is a critique often heard on the left, but one that Vice President J.D. vance, for example, maybe makes on the right too. Here he is speaking at the Intercollegiate Studies Institute a year ago.
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J.D. Vance
One measure, I think of globalization is how many of the profits are laundered through the financial sector in the American economy. So if you go back to 2007, 2008, about 25% of corporate profits right before the financial crisis were going through the financial sector. Well, think about that, right? If you're fundamentally taking American assets, offloading them to East Asia or to Central America, that that requires a much more robust financial sector than lending money to your sort of neighbor down the street. And so I think it's telling that sort of the peak of globalization, which I hopefully think was 2008, you had this massive, massive concentration of corporate sector profits in the financial sector and you don't have nearly as much real productivity growth.
- [01:43]
Host
Neoliberalism is often said to have originated in the 1980s and 90s under Ronald Reagan, then Bill Clinton, when Wall street became a global power. But does this make sense? Is neoliberalism too loaded a term to help us understand the major economic changes of the post Cold War and their consequences? With us in this episode, historian Daniel Besner, an associate professor in American Foreign Policy at the University of Washington, and he's the co host of a very popular podcast, American Prestige. And historian Phil Magness, a senior fellow at the Independent Institute and the David J. Thoreau Chair in Political Economy. Phil Magness, welcome back to the show.
- [02:26]
Phil Magness
Happy to be here.
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Host
And Daniel Besner, welcome back.
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Daniel Besner
Thanks for having me.
- [02:30]
Host
I don't host too many debates. Not that this has to be a debate, but I'm looking forward to a lively discussion. I launched History as it happens in early 2021, and one of my aims was to take on the widespread ignorance or unfamiliarity with basic political and philosophical concepts. And I've done shows about what is socialism, what is fascism, what is populism today, what is neoliberalism? But Phil, I guess I'll start with you. You think this term that I see quite a bit on Twitter, but in other contexts as well, kind of an explanation for current form of capitalism in the world today. You don't think neoliberalism is a real term? You think it's nonsense. Tell us your views on that.
- [03:11]
Phil Magness
Neoliberal. I think that's exactly it. It's a pejorative term that has a long history and some weird iterations of how it's used. But neoliberalism has never been something that people have widely adopted as a self descriptor of their views or their beliefs. As a result of this, I think neoliberalism has some pretty severe definitional problems in that it basically means anything and everything that the user of the term wants it to mean. We can go into the history of it a little bit. It actually dates back to 1920s. It emerged as a Marxist critique of marginalism in economics, which is kind of the precursors of the neoclassical school today. And then through various permutations in the 20th century, it was applied and then disavowed as a descriptor for free market thought. Then in the 1990s, another version of the term emerges and it basically describes like a center left economic outlook that's associated with the Bill Clinton administration. Then we're back. Today it's deployed as a term for everything from the economic beliefs of Hillary Clinton to the economic beliefs of Donald Trump. And I basically argue that when you have such a broad and fluid definition that is also essentially deployed in a pejorative way, it simultaneously encompasses everything the user dislikes, but it's also essentially meaningless.
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Host
Dan?
- [04:36]
Daniel Besner
Yeah, and it's interesting because I make a very similar argument about fascism, about how it's not a useful term. I guess I would differ here because I do think fascism stopped operating effectively in 1945 when it was defeated in World War II. And though I do agree the neoliberalism, much like liberalism itself, is a term that is very protein, it has changed over time. Like most things, it is linked to the 1920s. My favorite 1920s coinage personally, as far as I'm aware, is spetz Capitalismus is late capitalism. It's been late for a while. I think it might just be capitalism at this point, but I do find it useful from a historical perspective to basically reference difference A different type of policy and discursive and to some degree political economic regime that came after what historians generally refer to as mid century Fordism, running from roughly the 30s to the 70s, and then something changed with the end of the Bretton woods system. And I find neoliberalism, given all the potential ways that one could describe that, to be a relatively useful term to describe a new policy regime that is more skeptical of labor unions, more skeptical of regulation, is more in favor of free markets, or defined as the markets that the state chooses to be more or less free, and also a sort of way of understanding what politics is and what a utopian vision of society would be. And I would say there is a difference between the utopian vision of a mid century Fortis and the utopian vision of a, you know, I mean, Friedman and all these guys were writing in the 50s, but let's just say when they came to power in late Carter and then during the Reagan administration, they have different visions of what the best society should be. So while admitting that all of these blanket terms do have significant problems, I do think that neoliberalism does refer to something real in history.
- [06:31]
Phil Magness
I think it's an interesting discussion to have, and I don't want to get hung up on definitions here, but I look at something like neoliberalism as it's currently applied. It usually is used to describe what we would consider free market economists. And this is everything from the Austrian school, someone like Friedrich Hayek, Ludwig von Mises, to the Chicago school of Milton Friedman and George Stigler, and basically their heirs and descendants today. But something that I always point out is that these economists were active in the early debates of the 1920s and 30s, when this term starts to be used pejoratively against them. And nothing really changed in their views by the time they started to gain more credibility in the policy sphere, which is variously dated to after World War II to maybe sometime in the mid to late 1970s. The basic way that I interpret that change, though, is not so much that there's a neoliberal ethos that's emerging to replace something. It's actually a continuum of a debate that had been waging for quite some time, certainly since the New Deal era. And that is between free market economic approaches that predate the New Deal. And really what you have is the Keynesian ideology, the view of economic policy most strictly associated with John Maynard Keynes that emerges out of the Depression. That's the notion that the government should be something of a regulatory hand in guiding the market A mechanism of funding to level and stabilize business cycle events. The critiques that free market types made in the 1930s of Keynes still applied in the 1970s. And really the impetus of the transition is not like this intellectual upheaval where neoliberalism certainly becomes ascendant. It's rather cracks we're showing in the Keynesian system. In the mid to late 70s, after the Bretton woods system collapses, Nixon takes us off the gold standard. We went through a period of some very severe inflation. We went through a period of economic stagnation in the United States. And a lot of these causes were pinpointed to monetary mismanagement, to excessive deficit spending, and no attempt to, to bring that back under control in times of economic rebound. They were attributed to the lag imposed on the economy by overregulation. And some of the same arguments that were deployed back in the 1930s originally against the Keynesians are simply rediscovered. Or policymakers start to think, well, maybe we should try them as something different. Because obviously what was happening under the Keynesian order in the 1970s wasn't working.
- [09:06]
Daniel Besner
I think that's totally right. There was a stagnation of the Fordist economy. We might disagree on the degree to which the United States is economy was Keynesian. I would describe it as militarily Keynesian. I genuinely think it was a military Keynesian more than, more than anything else. But no, I agree. That's right. And I think what you're getting at, and again I agree with this, is that this is really a debate within capital L, 19th century liberalism. I mean, I basically believe every American is a liberal in the 19th century sense, and these are essentially different species of it. I'm about to publish a book on Cambridge about Cold War liberalism. And I focus much more on the political theory of liberalism and sort of its military sort of approach. But like we're talking about fights within the broad capital liberal tradition. I what we call in the United States liberalism and conservatism are essentially different parts of 19th century liberalism that emphasize different things. The Hayekian argument, the Mises arguments were being made in the 20s, 30s, 40s. I do think they change over time. I mean, my advisor was Malachi Hakon, so he gets really deep into sort of that Austrian transition and the various like calculation debates of the 30s and 40s. I do think they change into the shadow of fascism in particular. And what they read at the time, totalitarianism, a term that I don't think is very useful, but one that they use. But broadly speaking, you have A disagreement about what type of regulation is ideal. The thing that I do think is different is that when these debates get transferred from Europe to the United States, they're in a very different context. And I think that the biggest things that I would say are different between what happened in the 70s and what happened is going on in Vienna in the 30s, and then, you know, in New York and Chicago in the 40s and 50s and beyond, is that the United States, I think, does have a different type of tradition of monopolization and financialization. And so you get a lot of these arguments that were formed in a very different context of, like, Red Vienna coming to the United States to address, like, the massive conglomeration that has happened since the 1980s and the massive types of financialization that have happened since then. But I think I broadly agree with the. With the claim.
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Host
Professor Besner, you get one demerit for bringing up the term fascism in your first sentence there. That's okay.
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Daniel Besner
We've already discussed that Hayek was responding to, I mean, Mises was a Jewish guy responding to fascism, as far as.
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Host
Being able to define it. But we're not gonna go down the fascism rabbit hole debate here. I was just kidding around. No, the point here is definitions do matter. I'm not interested in them, just purely for academic reasons. All I think that's okay if you wanna define something so you can understand what this word means, say in one or two sentences. We're living in a very populous moment now. We're seeing a resurgence of economic nationalism, at least in the United States. Some would call what China's doing state managed capitalism. So if my podcast aims at trying to explain the origins of current event, how we got into this moment where tariffs, for instance, while they are not popular, as Phil Magnus would be quick to point out, they're back on the agenda. Right. For the United States. Or as Danny Roderick wrote just recently the other day in Project Syndicate, we're seeing the eclipse of neoliberalism. Neoliberalism is dead. So that's what I'm getting at here. If either one of you wants to take that on before I give you my definition of neoliberalism.
- [12:16]
Daniel Besner
Sure, yeah. Because I have a take on this and it just to be put my cards on the table, it emerges from a very deep analysis of the media industry in particular, which I take to be a stand in for larger processes that have occurred over the last 40 or 50 years. To me, the two defining economic phenomena of the period since, let's say, the mid to late 1980s are conglomeration and financialization, which is basically the US government stopping to enforce laws that are on the books against conglomeration and for the deregulation of the economy in terms of finance, allowing financial institutions, whether you're talking about asset managers or groups like private equity groups or hedge funds or even banks themselves, to invest and earn money off of assets in ways that they weren't allowed to before the 1980s and really the 1990s, with I think Bill Clinton finishing what I would term the neoliberal project. But if you want to say sort of the, the free market, anti regulatory project, I'm fine with that as well. I would say those are defining features of the last 50 years that are unique in the history of the 20th century because the United States economy wasn't sophisticated enough to basically support the type of large conglomerates that you see like Disney owning basically Pixar, Lucasfilm, Marvel as conglomeration. And then sort of the financialization that allowed Disney, in the wake of the 2008 financial crisis, all up in zero interest rates to purchase all of those things. So to me, Those are the two defining features that make our last, let's say last 40, 50 years of history unique. Financialization and conglomeration. And so when we're talking about tariffs, to me they're essentially bullshit. Not just because I think, like tariffs don't quite make sense in the 21st century economic context like they did in the 19th century when the United States is a developing economy. Yeah, but the United States is a developing economy. And this is like a classic move that developing economies do to develop, to basically protect their own industries. I mean, to get a post neoliberal moment, I think you would actually have to attack the two core features of neoliberalism, which are conglomeration and financialization. And Trump has done none of that. He has basically done nothing to regulate capital flows. He's supported monopoly, as you could see, with the Netflix purchase of WBD or maybe the Paramount purchase of wbd. So I think it's essentially a lot of sound and fury, not signifying much. However, I do think, and this is, I know philosopher disagree with this, I think Marx was right about the tendency of the rate of profit to fall. That is like a feature of capitalist economies. And so I think we're entering a moment where capital itself doesn't really have places to invest. The way I put it to my students is that when you're building St. Louis in 1850, you're going to get serious returns on each dollar and I just think there's fewer places for genuine returns like that in the 21st century economy. So what you wind up doing is sort of political, regulatory, financial chicanery to keep the rate of profit relatively the same, but not off what I would say a philosophically real asset. So there was a lot there, but that's how I understand what's going on now.
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Host
I'll return to the policy changes in the late 80s, early 90s in a moment, but Phil, I know Dan just did unload a lot there. What do you want to pick at on that?
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Phil Magness
I basically want to look at the Roderick piece that you mentioned. Neoliberalism.
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Host
Neoliberalism is dead. He says, go ahead.
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Phil Magness
Yeah, yeah. He's declaring the end of neoliberalism. We're in a post neoliberal age. We're also in a post liberal age according to people on the right. But the one thing I'd point out about Roderick, he's been writing the same op ed for 25 years. You go back to the late 1990s, and he was the guy that was claiming that free trade was leading us off the cliff and that this is a product of neoliberalism, as he designated it. Then 10 years ago, he made the same claim. Fifteen years ago, after the financial crisis, he made the same claim. It's like this one trick pony that has neoliberalism as his point of blame for everything that he dislikes about the modern economy, and he's just repackaged it in a new editorial. Now, there is one difference that I see in the current rhetoric that's emerging around neoliberalism is although it's conventionally been used as a term from the left and pretty much the economic far left to attack everything from center left, Bill Clinton style, New Keynesianism, all the way to Milton Friedman and Friedrich Hayek on the more laissez faire end of the spectrum, it's almost always been situated on the left. As the users of this term, they're making a critique of what they see as the status quo. But in the last few years, we've actually started to see neoliberalism be adopted on elements of the political right, the New right, the J.D. vance wing of the Republican Party. And in fact, Vance has given speeches to where he rants against neoliberalism. Sohra Bahmari, Patrick Deneen, these post liberal New Right thinkers that are generally hostile to free market economics have adopted neoliberalism as their rhetoric. I guess there's two really interesting things about this and the first off is that it's kind of repeating history again. I know you said not to go into the fascist era, but I'll just make a brief reference.
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Host
No, you may. I just don't want to debate the definition, definition of fascism entirely.
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Phil Magness
But you go back to 1920s Germany, when the term first originates, when it first is used in the modern sense. It starts with the Marxists. It's Max Adler and Alfred Moisel, who are these Weimar era Marxist theorists that are in the debates and they're attacking the marginalists with the term neoliberalism. And a few years after that, it's actually the populist right what becomes the Nazi movement movement starts adopting the same rhetoric and making similar claims, albeit from the other end of the spectrum. What we've seen in the last four or five years is something of a weird return to that, that the populist right and then the anti market far left have settled in on this concept as their joint boogeyman for everything they see is wrong with the economy. And that again is associated now with Trump's tariff agenda. Although I don't think think the far left is on board with that tariff agenda. In fact, very little of the American public is supportive of tariffs. It's like Trump's worst polling issue right now. You're down by double digits. Super majorities of the public across the spectrum oppose this policy, but you have, weirdly, it's an elite driven example of populism. A very small group of economists and intellectuals that have gotten into the influence realm of the Trump administration because you got this guy that has this long standing ideological belief in tariffs, and they've come and backfilled it with an intellectual rationalization that says, well, yes, this is an obvious response to the failures of neoliberalism that we've seen ravaging America and hollowing out industry and all the usual lists of grievances. But again, coming from the populist right in a way that 10 or 15 years ago you only would have heard that rhetoric on the far left.
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Host
Professor Besner, anything to add there before I launch us?
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Daniel Besner
Well, I, I'm just curious what Phil thinks about the financialization and conglomeration points, because to me this is something that Mises and Hayek would have fucking hated. You know, like, like having read a lot of them, it's kind of interesting because to me that seems like profoundly unconservative. It stifles competition, it concentrates power. And I mean, from terms of political theory, corporations are just states just at a lower level of organization. So I'm just curious, like this is what always gets me about some of these discussions. It seems like the people that are referred to, I know Hayek would have hated that there are four conglomerates in every industrial sphere. So it just seems like we're in a weird moment where there's a lot of like reference to 20. Not, not saying you're doing this at all, but in general that were referenced to 20th century thinkers who would have been very against the concentration of economic and political power and small numbers of people.
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Host
18Th century thinkers as well are found fathers basically every.
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Daniel Besner
I mean there. I don't think there is a real conservative tradition in the United states until the 1950s. And it's really just an anti New Deal thing. And it's really organized essentially around the WASP elite that's critical of the New Deal. And then over time, over the 60s and the 70s, other other sort of streams are brought into it. William Buckley is not like free market, you know, that's especially when it comes to issues like race and stuff like that. But I'm just curious, like what's your take on this? Because that's what I think the two distinguishing features of the neoliberal iron creating a policy regime for conglomeration and financialization.
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Phil Magness
It's an entirely fair question. You look at someone like Mises, someone like Hayek, they are economists first and foremost. They recognize the problems that arise in monopolistic conditions. It's a contraction of the available supply of a good and prices go up. But they also have a different diagnosis. This isn't some product of laissez faire and the market being allowed to run. While that's usually monopolies emerge in what we would call the public choice tradition through collusion between powerful state actors, government officials and powerful private sector actors.
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Daniel Besner
No, for sure, for sure. But that's history. So this is my. Yes, 100% right. This is why I would say the free market itself is a myth. Whether you're looking at the railroads or whether you're looking at Tesla and Google, like there's always state embeddedness. Because in actual history, I mean, I. Yeah, I mean it's just what happen happens, right? State. States and corporations are theoretically the same thing. Like I think literally if you go back to the early modern period, like the political theory behind them is actually literally the same. So of course the state is going to choose the winners. You know, like. So then this is my criticism of the Hayekian mystician tradition, which I, I actually think there's significant insight There in terms of like the criticism of what they call term social engineering, I wouldn't quite term it that way, but the notion that you could like direct human affairs, I think think that's not wrong. There's never going to be in capital H history a free market.
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Host
So let's.
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Daniel Besner
And so like what do you do with that?
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Host
That.
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Daniel Besner
That's always my answer to the libertarian tradition. It's like, sure, but like, much like the anarchist tradition, it just doesn't happen in human history. I think that's, I would say a variety of reasons.
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Host
A great point, Dan. I do want to hear Phil's full response here. I'll just also add, when the free trade consensus was emerging in the 1990s, multinational corporations such as Walmart lobbied really, really hard for the opening of China. I want to return to that issue, free trade and this whole neoliberal idea in a bit, but go ahead, Phil.
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Phil Magness
I guess a lot of things on the table to respond to and I look at something like the financial crisis, which is often seen as this moment of upheaval economically and it is because.
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Host
Of deregulation was the argument, but go ahead.
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Phil Magness
Well, that's the argument. Now suppose someone like Mises or Hayek or Milton Friedman had been around and commenting on these events as they unfold. I am absolutely certain that all three of them would have been horrified with the policy response and the policy causes that brought about the financial crisis. Certainly there is government entanglement in the housing market and the lending market that works in ways that are very anti competitive and in fact causal sorts of inefficiencies and problems to accrue the immediate response to the financial crisis. It wasn't let the markets play out, it was bailouts. It was large companies coming down to the Federal Reserve or coming down to the Treasury Department and seeking specific policies, even to the point that the late tail end of the Bush administration as well as the early Obama administration both put pressure on private sector institutions that aren't going along with bailouts to join in to be part and parcel of the policy. Otherwise they'd be excluded or face even regulatory penalties out of that. And I look at situations like that and it's really the collusion that leads to many of the problems and grievances that I think are noticed and diagnosed by some of the critics of what they would call neoliberalism. But they're very much antithetical to the people that are described as neoliberal liberals. Is there an answer to this type of a scenario evolving? No, there's no government in history where private sector lobbying and public sector officials have not been entwined. This was a point that Adam Smith made about the East India Company and the multinations. This is a government collusive monopoly that has essentially been established and he's pointing out all the ill effects of it. At the same time, we should shouldn't just abandon any hope that there's an ability to do anything about this type of collusive arrangement simply because it happens in history. And I think the typical response that you find from someone like Mises or Hayek is you start looking into things like constitutional theory. What are norms and values you can establish?
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Daniel Besner
Weak. Weak. We all know this is the problem with libertarianism, right? Once you start talking about consciousness, constitutionism. What was that horrible quote? I reached for my Browning? I think that was Herman Gering. Once you start going to constitutions and norms, there's a serious problem. I think that to me is leap of faith stuff that you're essentially relying on.
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Phil Magness
I mean, the alternative is a collapse of the constitutional order. And again, we've seen that in history. And it's a thousand times worse than anything you find in attempts to have a stable constitutional norm.
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Daniel Besner
The problem is you have to have some serious redistribution that gives people to.
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Host
Listen to this entire episode go to history as it happens.com For $5 a month, you get all bonus content, ad free listening and 247 access to the entire catalog of 500 episodes. That is history as it happens dot com.