Neoliberal Newspeak: Monopoly Is Competition
The left embrace of monopoly at the heart of its critique of capitalism was hardly emulated by mainstream economists. To the contrary, over the course of the 1970s and certainly by the early 1980s, the field went in precisely the opposite direction. The neoliberal shift to a “leaner, meaner” capitalist system brought the “free market” economics of the Chicago School into a position of dominance. The ideas of Hayek, Friedman, George Stigler, and a host of other conservative economists now ruled the profession. Traditional Keynesians and institutionalists - those more sympathetic to reality-based assessments of monopoly - not to mention left economists, found themselves marginalized.
The victory of neoliberal economics was not the result of superior debating techniques or stellar research. It is best viewed as the necessary political-economic policy counterpart to the rise of monopoly-finance capital.62 More specifically, it can be described as a response to the changes in accumulation and competition associated with a new phase of stagnant accumulation in the capitalist core, and to the associated financialization of the global economy. The general transformation in capital’s global imperatives in the 1970s and ’80s was powerfully described by Joyce Kolko in 1988 in Restructuring the World Economy:
Capital continues to flow in quest of profit, and this process itself objectively restructures the economy - through accretion, not as a consequence of a strategy or a plan. But profit since the 1970s is found primarily in financial speculation and commercial parasitism, and in other ephemeral services, rather than in production…. The phenomenal growth of financial “product innovations” in the 1980s, the internationalization of equity markets, the stampedes of currency speculations by banks and corporations gambling for a quick return…all follow the laws of capitalism…. The banks themselves have been transformed from being...