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be freed from government to the greatest extent possible. What ensued was a philosophical abomination. It had nothing to do with the ‘freedom’ of the market and no credibility in either theory or practice. Yet over the last two decades of the twentieth century its ideas became deeply influential across the world. It is quite simply Fargonomics. Its ethics are gangster ethics, the law of the jungle. And it’s created a form of capitalism that has worked exceptionally well for the few but continues to fail for the many.

      The voices in Davos reflect a rising awareness of this failure. The assailant was known to us, they seem to imply. We made a mistake in trusting him. We understand now the lesson that Smith tried to teach us. We must reverse the damaging policies of the past and make capitalism work for everyone. Profit with purpose in Benioff’s view. A strengthening of ‘reciprocal obligations’ in Collier’s book.

      These proposals are clearly important. Revolutionary even, by recent standards. They represent a call for a return to capitalism’s ‘golden age’ – the immediate post-war period – where business was kinder, inequality was lower and the concept of social welfare mattered. But as the Financial Times columnist Martin Wolf has pointed out, things aren’t that simple. Conditions have changed. ‘The egalitarian western societies of the 1950s and 1960s had a global monopoly of industry and a social solidarity bred by shared adversity,’ he wrote. ‘That past is a foreign country. It can never be revisited.’¹⁷

      It’s a salutary reminder that we cannot rewind history. But perhaps, as Maya Angelou suggested, we can still learn some of its lessons. If neoliberalism was the assailant, why was it allowed to wander free over so many decades, inflicting its pain across society? Why was the damage condoned for so long? What convinced us to buy this misreading of Smith’s vision of the market in the first place?

Serious money

To answer these questions, we have to rewind further. The immediate post-war period was a dry one for the ideological right, for some of the reasons that Wolf identified. The post-war consensus was forged from the harsh lessons of the Great Depression. It was dominated by the economics of John Maynard Keynes. The state has an irreducible role in the economy, said Keynes. Deficit spending by government was the only thing that saved the US economy from ruin. There was no room here for the free-marketeers.

      But then came the 1970s oil crises. Against fast-rising resource prices, the West found itself ill prepared. The deficit spending of the 1930s proved ineffectual against the conditions of ‘stagflation’. Worse, it gave rise to a deepening public debt which had repercussions beyond the economy itself. Here was the opportunity that the neoliberals had been waiting for. They seized their moment in the sun to precipitate a sharp shift towards the political right.¹⁸

      The new politics offered ‘freedom’ as the ultimate arbiter of human affairs. The monetarists set about deregulating the economy and privatizing markets. Lowering interest rates. Loosening financial regulations. The so-called ‘Big Bang’ was brilliantly satirized in Serious Money, a 1987 play by the writer Caryl Churchill. Written in rhyming verse and played at breakneck speed, it offered ‘a savage breathless indictment of high finance and its greedy, cut-throat culture’. The performance was a huge hit – even amongst those it satirized. At one point in the play, one of the most aggressive traders insists:

      We’re only doing just the same

      All you bastards always done

      New Faces in your old Square Mile

      Making money with a smile

      Just as greedy, just as vile.¹⁹

      It was a clever echo of a common justification for this new cut-throat capitalism. Money makes the world go around. Same as it ever was. Only now the culture of greed was sanctioned by a state which was trying to remove itself from the fray by privatizing everything. When the show transferred to Wyndham’s Theatre in London, the newly privatized British Telecom notoriously refused to provide telephones for the production, saying: ‘This is a production with which no public company would wish to be associated.’ The play is now a set text for high-school exam courses.²⁰

Too big to fail

      A burst of ‘liquidity’ was just what the neoliberal economists had ordered. It worked after a fashion. Growth of a kind returned for a while. But its proceeds flowed predominantly to the rich. The reprieve – if it can be called as much – was short-lived. The 9/11 attacks in September 2001 threw another curve ball at the economy. Governments tried more of the same: more deregulation; more liquidity; and a whole new basket of complex financial instruments that no one – it turned out – really understood.²¹

      The consequences were disastrous. Loose money and lax regulation ended up destabilizing financial markets. And they deepened social inequality. Protecting the interests of capital over the interests of workers inevitably favoured the rich over the poor. In a stunning reversal of almost fifty years of social progress, inequality within developed countries increased massively over the final decades of the twentieth century.²²

      The prescriptions for recovery had just made things worse. The early years of the twenty-first century turned into a ‘casino’ of speculative borrowing and lending. Households accumulated more and more debt. The conditions for chaos were mounting. All it took was a change in the rate of defaults on ‘subprime’ loans in the US housing market and in 2008 the bubble burst. The unintended consequence from half a century spent chasing after growth was the biggest crash since the 1930s.

      ‘The question arises,’ asked Summers in 2014, ‘can we identify any sustained stretch during which the economy grew satisfactorily with conditions that were financially sustainable?’ His answer, and the answer of an increasing number of other economists, was: no. Chasing growth through loose monetary policy in the face of challenging underlying fundamentals had led to financial bubbles which destabilized finance and culminated in crisis.²³

Following the collapse of Lehman Brothers on 15 September 2008, western governments committed trillions of dollars to securitize risky assets, underwrite threatened savings, re-capitalize failing banks and re-stimulate the economy. No one pretended this was anything other than a short-term solution. Many even accepted that it was regressive: a temporary fix that rewarded those responsible for the crisis at the expense of the taxpayer. But it was excused on the grounds that the alternative was simply unthinkable. Collapse of the financial markets would have led to a massive and completely unpredictable global meltdown. Entire nations would have been bankrupted. Commerce would have failed en masse. The humanitarian costs of failing to save the banking system would have been enormous.

      But government bailouts precipitated further crises. Country after country, particularly across the Eurozone, found themselves negotiating rising deficits, unwieldy sovereign debt and down-graded credit ratings. Austerity policies, brought in to control deficits and protect ratings, failed to solve the underlying issues. Worse, they created new social problems of their own. The withdrawal of social welfare compounded income inequality with something even worse: inequalities in healthcare, in longevity, in basic security, in human dignity. The injustice of bailing out the architects of the crisis at the expense of its victims became plain for all to see. ‘That’s your bloody GDP! It’s not ours!’²⁴

      Ironically, none of this achieved what it was supposed to achieve. Growth rates didn’t recover. Even before the Covid-19 lockdown, they were in a more or less steady decline. Austerity had left healthcare systems woefully unprepared for a global pandemic. Closing down economic activity was the only alternative. The chance of a smooth ‘recovery’ to the pre-crisis era remains slim. The likelihood of growth rates comparable with those in 1968, when Kennedy addressed the students in Kansas, remains virtually nonexistent. The conditions for wider social and political unrest remain palpable.

      The most profound lesson from this very brief history is that the exact same policies designed to bring growth back were precisely the ones

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