Masters of the Universe is a perfectly serviceable history of 20th century monetarism as it slowly comes to assume the economic and political proportions of a contemporaneously recognizable ‘neoliberalism’. The book itself effectively separates the two wings: first, Hayek, Simons’, Stiglers’, Tullocks’, and Mises’ economic developments within the Colloque Walter Lippman as it evolved into the Mont Pelerin Society, and secondly the political elements which reached back to Adam Smith to invest their economic attitudes with a political-philosophical dimension. Additionally, Stedman Jones departs from the usual narrative which places American monetarists like Milton Friedman in the place at the right time, focusing extensively on the presumptuous false starts of neoliberal policy efforts in the 50s and 60s (well before the cataclysmic 70s which saw the death of Keynesianism in the US and Britain, or the sudden invasion of the ‘Chicago Boys’) and, additionally, the profoundly ‘center left’ character of neoliberal policy activation, which was not began with Reagan but with Carter as he struggled to control brutal stagflation through monetary target policies on wages. Finally, he presents considerable evidence that neoliberalism is by no means a revolution in thought but the results of the entrenchment of a specific program undertaken by “anti-collectivist” rich, funding sympathetic intellectuals like Hayek and Mises, who slowly developed a separate ecosystem of economic endeavor which could preserve itself and bide its time through the long dark decades of middle-century Keynesian consensus. Of particular note is the author’s interviews with economist Peter Jay, who at one point describes an educational meeting of young Treasury employees in Britain, and the loud denunciations they heaped upon a student who suggested 2.25% unemployment was acceptable socially. Anecdotes such as these strongly illustrate the magisterial bit of self-promotion and political-cultural work the neoliberals succeeded in undertaking: within years, the focus had shifted entirely to managing inflation, and with that, the slow destruction of ‘social democracy’ (insofar such a thing ever existed).
However, the author does have a tendency to perhaps overstate Keynes’ contributions. Owing to his own center-left thinktank bona fides, it’s clear Stedman Jones has far more sympathy with if not necessarily Keynesianism (for example, he critiques the pretension to coherent business information present especially in Kennedy admin economic policies (the ‘fine-tuning doctrine’) as foolish) in practice than Keynes himself. Writing a history of, say, Friedman, by way of Keynes, is a bit of a strange tactic, though to say he oversteps in establishing the rigidity of this genealogical relationship is perhaps a bit overblown.
The back 25% or so of the book particularly shines. In chapter 6, discussing President Carter’s dismissal of arch-Keynesian G. William Miller as Fed chairman and his replacement with Paul Volcker, and his concomitant/novel approach to Fed behavior, the fact that a sea change has occurred is clear. Volcker’s pushing through of monetary policy (focused on monetary supply in the total economy) as opposed to the languishing Keynes-esque attentions on aggregate demand becomes the star around which the entire account here orbits. Whereas a typical response would regulate Fed interest rates, Volcker’s limitation of monetary supply not only sufficed as a decidedly Friedman-inspired policy move but also reflected a deeper truism of the Pelerites: a fundamental dismissal of market controls based on assertions of unknowability within market activity; put another way, capitalist activities suffer from a ‘knowledge problem’, or what Bohm-Bawerk/Hayek et al. called the socialist calculation problem, of administration of multiple variables. Where Keynesians believed in market information and the ability to modulate economic factors at the national level, Friedman and his acolytes rejected this; similarly, they rejected the idea that the market could be understood meaningfully at all, and in fact consumers were also limited in their ability to understand their own market activities outside basic groping towards desires and needs with no eye to the future.
In chapter 7, this consumer-level application is made particularly clear, as Stedman Jones provides a phenomenal overview of housing and urban policy in the US and Britain. Crucially, he veers away from a view that holds public housing was ever a particular goal, especially in the US, where in 1979 residence in public housing at best was 2-3% nationally. Even within Truman’s announcement of the 1949 Housing Act, there was a “clear focus on the private sector even at the peak of the dominance of New Deal liberalism”. This sort of sobriety is essential, especially in consideration of the forcefulness of Hayek’s, Friedmans’s, and Stigler’s (in particular) broadsides against public housing and rent controls which they claimed promoted ‘fossilization’ of residents within existing stock and prevented mobility, that is, such programs enabled to too great a degree multigenerational housing outcomes (too many under one roof) that prevented labor from ‘following the work’, and further distorted markets and supply by keeping rents artificially low and preventing new builds or maintenance which would (a favorite claim of this whole cabal) produce inaccurate market signals which would burst free later. For example, limiting rents would lead eventually to an apocalyptic explosion in rents, raising wages would produce problems resulting in a freefall in real wages, and public spending would only cover up an eventual collapse in same. The logic is anything but, unless you think that no one should build a dam or a building because eventually it will collapse, or that you shouldn’t make your bed because you’ll sleep in it again later, and that these constitute a way to run a society.
Finally, Stedman Jones makes the case that the leading light and historical lodestar of all the above, after the Pelerites have moved beyond Popperian approaches to philosophy of science and history, depends on an erroneous understanding of Adam Smith which relies on a construction of the man as one utterly and slavishly devoted to negative freedom. However, Smith advocated widely, in the classical Enlightenment vein, for public spending in the field of education, which we may say corresponds broadly with a moral understanding that recognizes the idea of a maximally beneficial universalism insofar as the entire body of society is concerned. The monetarists turn from this in favor of a bleakly nihilistic universe, in which political action and the role of the citizen is formally grounded in the ability to exist as an economic sovereign. Gilles Châtelet is correct to identify this worldview as one based on atomics or thermodynamics - society is an idiot swarm pulled by their desires and voting with their money, where cohesion is an accident and social activity may only be ‘emergent’.