Power, Not Economic Theory, Created Neoliberalism

The Real Story Behind Neoliberalism: Power, Not Ideas. Forget the myth that neoliberalism triumphed because it was intellectually superior. The real driving force behind its rise was not a grand victory of economic theory, but a dramatic shift in power among society’s most influential players. To understand this, imagine the post-war world: For decades, many Western countries relied on a combination of state intervention and welfare policies, loosely inspired by John Maynard Keynes. Keynes argued that markets alone cannot guarantee full employment or stability, so governments must step in. His ideas gained traction not simply because they were brilliant, but because the political and economic elites of his era needed them. The world was desperate for solutions to the Great Depression, and Keynes's status among the British elite gave his proposals a megaphone. Fast forward to the 1970s and 1980s. Economic turmoil—stagnation, inflation, shrinking profits—was shaking the foundations of post-war prosperity. Business leaders and political elites saw their margins squeezed by regulations, welfare programs, and strong trade unions. Their patience with the welfare state ran out. Suddenly, the old order, which had tolerated and even relied on labor power and redistribution, no longer seemed tenable. This is where the story of neoliberalism's supposed intellectual victory falls apart. Figures like Milton Friedman and Friedrich Hayek had long championed free markets, minimal government, and the rolling back of social protections. But for decades, their ideas were relegated to the academic wilderness—ignored not because they lacked intellectual appeal, but because the powerful had no use for them. When the balance of social forces shifted—when capital wanted to cut costs, weaken unions, and reclaim freedom from state intervention—these “neoliberal” ideas suddenly became useful. Politicians did not turn to them out of philosophical conviction; they needed justifications for policies that prioritized business interests and market “flexibility.” The economists who had been on the margins were summoned to the center stage, not because they won a debate, but because their prescriptions aligned with the new priorities of those in charge. What does this mean for anyone dreaming of rolling back neoliberalism today? It’s not enough to have better ideas, sharper arguments, or more op-eds. As long as the social balance of power favors capital and the wealthy, transformative policies will remain out of reach—no matter how popular they are with the public. Real change comes when ideas are anchored to organizations and social forces with the power to make them matter: trade unions, grassroots movements, and political organizations capable of shifting the priorities of those in charge. Only then can new ideas gain the influence needed to reshape society. In short, the story of neoliberalism is not about the timeless sway of free-market theory, but about who holds power, whose interests are served, and how ideas become weapons in broader struggles over the direction of society. Ideas matter, but only when they have muscle behind them.