It may be far too early to begin writing obituaries for neo-liberalism; as with Mark Twain, reports of its demise constitute an exaggeration. With the growing critique of neo-liberalism, in which our own prime minister has joined, there is a pervasive assumption that it is something of an aberration, an errant change of course in the development of capitalism. That assumption is, I suggest, erroneous; the thirty-year phenomenon to which we give the name neo-liberalism is in reality capitalism qua capitalism; neo-liberalism is really capitalism unleashed with minimal regard for its social consequences. There is also a second myth that needs to be challenged in the emerging critique of neo-liberalism: the Keynesian consensus did not merely outlive its usefulness; it was undermined and sabotaged by a combination of US policy failures and opportunistic vested interests.

Some four decades ago, the long postwar boom began to show signs of slowing, largely brought about by inflation. It has become commonplace to blame government spending and the welfare state, but the greatest contributor to inflation in the late 1960s and early 1970s was US spending on the Vietnam War, which had created an unsustainable burden not just for the US economy, but for the world. The United States effectively printed money to bankroll the war; it was excessive money growth by the Federal Reserve that ignited the fires of inflation. That was one aspect of the economic crisis of the 1970s. The other was the quadrupling of oil prices by most of the major oil exporters. Why did they do this? It was in reaction to US policy in the Middle East.