“But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.”
This is the concluding paragraph of the final chapter of Keynes’s General Theory of Employment, Interest, and Money (1936). Angus Burgin has succinctly described this passage as “Keynes’s representation of the relationship between ideas and historical change” (Burgin, The Great Persuasion, 217). Burgin notes that Friedrich Hayek approvingly cited this passage when he “was preparing to found the Mount Pelerin Society.” It seems that Hayek agreed with Keynes’s basic claim about the power and primacy of ideas as forces of change in human history. Indeed, Keynes’s “belief in the long-term political impact of economic ideas” was a conviction shared by both Hayek and Milton Friedman (Burgin 218).
In retrospect, Hayek and Friedman turned out to be right about the long-term political impact of their own economic ideas. It took a couple of generations — as they expected it would — but neoliberal economic theory has moved from the margins to the mainstream of American political discourse.
Of course, for me to say that “neoliberal economic theory has moved“ is to make an idea the subject of the sentence, to give agency to the ideas of Hayek and Friedman and their fellow travelers. Yet as Burgin’s work shows, those ideas did not just “move” or “gain in influence” by some sort of natural process. Instead, a group of (mostly) like-minded economists and social theorists tirelessly championed the idea of the market as the arbiter of all social values, building and sustaining an entire network of institutions and publications and think tanks dedicated to promoting and popularizing faith in the market as the cornerstone of public policy.
So perhaps it’s not so much that Hayek and Friedman – or, for that matter, Keynes – “turned out to be right” in their basic conviction that “the world is ruled by little else” than “the ideas of economists.” (What a comforting thought for economists, no?) Perhaps it’s not the case that Hayek and Friedman embraced this idea because it was true. Instead, it may be the case that this idea was made true (in a Pragmatic sense, and a historic sense – and I guess those might be the same here) because Hayek and Friedman and others acted (and persisted in acting) on their belief in it.
Or am I making a distinction without a difference?