“Neoliberalism transformed British, American, and global politics,” argues Daniel Stedman Jones in Masters of the Universe. “At the dawn of the twenty-first century, the triumph of the free market was almost universally accepted by mainstream politicians, public officials, and civil servants.” The pictures of Friedrich Hayek, Milton Friedman, Margaret Thatcher, and Ronald Reagan adorn the book jacket.

But what is “neoliberalism”? Jones tells us it is a “free market ideology based on individual liberty and limited government,” “a radical form of individualism,” a “boundless belief in markets and deregulation.” Besides Hayek and Friedman, we are soon introduced to Ludwig von Mises, George Stigler, James Buchanan, Gordon Tullock, and others. “Neoliberalism” is nothing but what Americans call libertarianism.

Never mind the hint of sarcasm you might imagine in the “boundless belief,” for Masters of the Universe is meant to be an academic book, authored by an Oxford Ph.D. in history who is now a London barrister. The reader will start reading this book as a fascinating history of ideas and their political applications, from the interwar years to the late 1990s, and even the Great Recession of 2008–2009. Jones’s command of political and intellectual history in both the United States and the United Kingdom (his double focus) appears impressive.

Mises’s ideas are the furthest to the “left” of this libertarian spectrum that Jones will entertain, even if he does mention a few more radical thinkers. Some links are missing in his story, but the reader might be satisfied that he chronicles “mainstream” libertarianism, the variety that has had political influence. The book is well-written, the historical details are entertaining, and the reader is ready to forgive many of the author’s venial sins.

Development of neoliberalism | The book traces the origins of neoliberalism and its label to a 1938 Paris meeting attended by Hayek, Mises, and a mix of Europeans that included German “ordoliberals” and French classical liberals. According to Jones, the participants were keen to avoid laissez-faire and wanted instead to “reformulate liberalism to address the concerns of the 1930s.” This group would later evolve into the Mont Pelerin Society, officially founded by Hayek in 1947. Over the following decades, the neoliberals would both drop their original label and become radicalized under the influence of the new, more radical Chicago school of economics, and of a more radical Hayek.

During this second phase of neoliberalism (from 1950 to around 1980), a transatlantic network of think tanks spread libertarian ideas, as Hayek had called for in his 1949 University of Chicago Law Review article “The Intellectuals and Socialism.” Jones emphasizes the importance of ideas and the crucial role that think tanks played in disseminating them.

However, he argues, libertarian ideas gained political currency only because a series of disruptive economic events prompted political leaders and the public to look for new ideas: the oil crises of the 1970s, mounting inflation and unemployment, and the observed impotence of Keynesian fine-tuning. Both the Democratic Party in the United States and the Labour Party in the UK had started moving toward Friedman’s monetarism and the necessity of reining in regulation and trade union power (following the criticisms of the Chicago and Public Choice schools). The world had become ready to welcome Thatcher and Reagan.

Triumph of neoliberalism? | By the time Thatcher and Reagan were elected (1979 and 1980 respectively), Jones tells us, neoliberalism had become generally accepted, had already started influencing politics, and was ready to achieve its more radical goals. In fact, the movement was so strong that it would continue to exert influence after the two political leaders left office.

As the book unfolds, doubts about the author’s interpretation of events grow. Is it true that neoliberalism was generally accepted by the early 1980s and that “it reigned supreme” by 1984? (Remember that neoliberalism is libertarianism, even if only the more “establishment” version of it.) Is it true that it ended up influencing even Bill Clinton and Barack Obama? Most libertarians would express serious doubts, even if the elections of Reagan and Thatcher did raise hopes.

It is striking how little Thatcher and Reagan actually accomplished in moving their respective countries toward more libertarian policies. I once read a British libertarian who perceptively noted that Thatcher had succeeded in turning a semi-bankrupt mixed economy into an efficient police state. Neither Thatcher nor Reagan took seriously the individual-liberty component of the libertarian philosophy. When Jones claims that the “neoliberals” (including Hayek before the 1950s) wanted a “limited but strong government,” he must not be talking about libertarians anymore.

Both in the United States and the UK, the regulation of business and everyday life continued to advance, even if its growth may have experienced a short pause in certain limited areas. Jones’s statement that, after Jimmy Carter, the “ripple of deregulation would turn into a tidal wave that washed away controls from large segments of the economy”—“relentless deregulation,” he describes it—is not far from the exact opposite of the truth. As for fiscal policy under Reagan, total non-defense federal spending increased by 61 percent (and defense spending increased 93 percent) during his administration, most of which went to entitlements and social programs. Jones is not very loquacious about this, prudishly mentioning only that “government spending proved tenacious over the entire postwar period.” He also notes that the neoliberal policy experiments “had decidedly mixed short-term results even on neoliberal terms,” though many of the policies he contemplates are decidedly non-libertarian.

Puzzles | Jones’s most baffling claims appear in Chapter 7, the final chapter before the concluding one. Its title seems to ask a question: “Neoliberalism Applied?”—but it deals only with housing and urban policy. (Interestingly, the running title in the chapter drops the question mark.) The double thesis of Chapter 7 is that, in both the United States and the UK, successive governments, starting even before Reagan and Thatcher, and continuing after them, subsidized housing for the middle class and the rich, while simultaneously restricting their support for housing of the poor.

How did government subsidize housing for the middle class and the rich? The deduction of mortgage interest from the federal income tax is duly noted by Jones. Many libertarians would argue that a tax deduction is not exactly the same as a subsidy, but Jones ignores this distinction. The author of Masters of the Universe, however, is hunting for other ways, however indirect, in which government subsidized the “wrong” people. He finds them in strange places. The subsidized freeway system, we are told, opened the suburbs to white middle-class workers, who were thus able to leave minorities to the decaying and crime-ridden city centers. Jones also echoes historian Margaret O’Mara in arguing that federal cold war policies favored suburbanization, notably through the localization of research facilities. Perhaps. But does one have to dig so hard to find distorting housing policies?

As for restricting support of housing for the poor, Jones argues that governments did it in two main ways. First, the thrust of public policy switched from building public housing to subsidizing private housing through the sale of council houses to their renters in the UK and through rent subsidies and rental vouchers in the United States. Secondly, local zoning regulations pushed up house and apartment prices, keeping out the people that the white middle class considered undesirable neighbors. On this second point, Jones is obviously right: zoning has been a catastrophe for access to housing. Not content with this, he throws in the “downward spiral and support for proper public transport systems.”

Except for the un-politically correct neglect of public transport and the sale of public housing to the poor in the UK, these policies have little to do with libertarianism. It is true, even if Jones does not agree, that housing subsidies are better than the ghettoization of the poor in public housing projects. Yet, most libertarians would disapprove of any government subsidization of a specific consumption good. As for zoning regulations, they are opposed by virtually all libertarians. So it seems odd that Jones blames “neoliberals” for policies that they loathe.

Chapter 7 is remarkable for another reason. It broadly ignores the long-term, organized effort by the federal government to support home buying by people who could not otherwise afford it, from the New Deal’s legislation to the Community Reinvestment Act in 1977 and the policies that pushed the poor to buy mortgages they could not afford. Surely, this is at least as important for housing policy as freeways and cold-war research.

Obsession with the market | If the penultimate chapter of Jones’s book is puzzling, its concluding one is astonishing. It is a concentrate of all the problems of the book. All the invisible threads are pulled together with the visible ones. All biases are laid bare, and all lingering questions are answered. The big problem, argues Jones, is that neoliberalism has won, even within the Democratic Party and the Labour Party. The “beguiling belief in markets” has destroyed the “belief in the efficacy and moral superiority of government and collective action.” The “obsession with the market” has destroyed “the public sphere.”

Seriously? For Jones, not only did neoliberalism generate the 2008–2009 economic crisis, but it is now so encrusted in common sense that it also presided over the public policies adopted to deal with the crisis. From their “fantasy world,” neoliberal economists and “Tea Party nihilists” created a crisis and adopted similarly flawed policies meant to try and fix their mess. Or so says the author of Masters of the Universe.

Jones sees in financial deregulation the immediate cause of the Great Recession. Like most others who have argued this point before, he is unable to give specific examples except for the abolition of the Glass Steagall Act of 1933 that prohibited universal (commercial and investment) banking. (How that contributed to the Great Recession, Jones does not explain cogently.) He is blind to the growing regulation that strangled financial institutions from the Great Depression to the Great Recession. No word on the 11-fold increase in the real-dollar budgets of the main federal financial regulatory agencies between 1960 and 2007. Before the 2007–2009 crisis, for example, the New York Fed had hundreds of regulating bureaucrats actually working on the premises of large banks. (On the Great Recession, see my Somebody in Charge: A Solution to Recessions, Palgrave Macmillan, 2011.)

To be fair, Jones does devote one whole paragraph (finally, in the conclusion of the book!) to the fueling of risky mortgages by U.S. federal policies, which included coercing banks into lending to risky clients through the Community Reinvestment Act (Jones gets the act’s date wrong). He is prudent, though, using weasel words like “it is alleged” and “it was suggested.” He glosses over the fact that the main public institutions in the failed mortgage policies were old-timers that date back to the New Deal. He obviously ignores that Ginnie Mae, a federal housing agency created in 1968, was itself at the origin of mortgage-backed securities. The agency still boasts about it on its website: “Ginnie Mae … revolutionized the American housing industry in 1970 by pioneering the issuance of mortgage-backed securities.”

On what planet does the author of Masters of the Universe live? Does he know much about Sen. Chris Dodd and Rep. Barney Frank, who figured among the artisans of anti-libertarian housing policies? In 2004, Dodd defended Fannie Mae and Freddie Mac as “one of the great success stories of our time.” In 2003, Frank said that he wanted “to roll the dice a little bit more … towards subsidizing housing.” Obviously, Jones could not have fit these facts with the same two politicians intensifying financial regulation still more with their 2010 Dodd-Frank Act. Anyway, since all this occurred in the “public sphere,” it must be good.

Jones is right to claim that blind “faith” and biases are dangerous. He has a point when he suggests that many libertarians didn’t, and don’t, guard themselves enough against that danger. But he is totally blind to the facts that contradict his own thesis. He sees “market failure” everywhere, but is rather discreet about government failure.

Masters of the Universe is a very disappointing book. It completely misses a crucial development of the past half century, which is the continuous growth of Leviathan. Jones attributes to libertarian ideas the responsibility for what Leviathan actually did against them. Perhaps he is just trying to re-establish the “moral superiority of government”?