Free The Deep State by Mike Lofgren Page B

departure from the prevailing postwar corporate consensus. During the 1930s and 1940s, democratic parliamentarianism narrowly overcame a profound global crisis that had in part been brought on by the failure or refusal of democratic countries to rein in the worst excesses of their capitalist economies. These unreformed excesses led directly to the greatest economiccollapse in modern history and a mortal challenge from the totalitarian systems that exploited the crisis. The democratic systems that emerged after a cataclysmic war claiming 60 million lives dedicated themselves to broader and deeper citizen participation in government and the creation of social remedies that would buffer against the threat of mass destitution. The National Health Service in Britain, Medicare in the United States, codetermination (worker participation in management) in Germany, and lifetime employment in Japan were all examples of postwar social policy in democratic governments. These innovations helped achieve unprecedented levels of broadly shared prosperity and drove economic growth throughout the industrialized world at a rapid pace.
    Corporate America was largely on board with the prevailing postwar consensus. After all, the terrors of the Crash of 1929 had been banished, profits were rising, and a high-wage policy meant that workers were avid consumers of industry’s output. But the twin shocks of persistent inflation beginning in the late 1960s and the oil shock of 1973 undermined business confidence just at the time neoliberal economic theories were arising out of academic obscurity to challenge that consensus. That said, this shift in attitude was only partly about concern over business conditions or the regulatory regime in Washington. The tenor of the times—the antiwar Left, the beginning of the Weather Underground’s bombing campaign, the atmosphere of cultural permissiveness—got the attention of business leaders because it suggested an anticapitalist climate taking hold in the country.
    The Powell Memo and the Laissez-Faire Philosophers
    In 1971, a corporate lawyer representing the tobacco lobby wrote a memo titled “Attack on the American Free Enterprise System.” 2 This memo advocated aggressive action by the business community against a perceived left-wing assault on business. The author advocated “constant surveillance” of textbook and television content, as well as a “purge” of left-wing elements in important institutions like universities, the press, andchurches. He also proposed institution building among business interests in the furtherance of influencing government policy. Nixon would soon appoint the memo’s author, Lewis Powell, to the Supreme Court, where he served until 1987.
    The Powell Memorandum became the manifesto and battle plan for a rollback of the New Deal and the enthronement of corporations as persons. Powell, like the probusiness conservatives he wrote for, considered himself a practical, pragmatic problem solver in contrast to the woolly-headed theorizers of contemporary liberalism. Jude Wanniski, another savant of the probusiness movement, published a book in 1978, and its title,
The Way the World Works,
emphasized the purportedly commonsensical and practical nature of the economic ideas he was peddling. But as Keynes famously said, “Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist.” Just as twentieth-century socialism rested on German thought from the nineteenth century, the theoretical structure of Powell’s business conservatism rested on a German intellectual foundation.
    Friedrich Hayek, Ludwig von Mises, and Wilhelm Röpke are generally considered to be the founders of the radical free-market doctrine that is now confusingly called neoliberal economics. * Hayek, the most famous of the three, described himself as a radical pragmatist and empiricist,