In the span of a single generation, the political economy of the industrialized world underwent a profound transformation. The mid-20th century consensus, built upon regulated markets, strong labor protections, and welfare state expansions, gave way to an era of market primacy, financial dominance, and structural inequality. This shift was neither natural nor inevitable. It was the outcome of an intellectual project, a strategic mobilisation of business interests, and a critical monetary rupture. At its heart lay four interwoven strands: the Mont Pèlerin Society, the Powell Memo, the end of the gold standard, and the rise of neoliberal economics.
1. The Mont Pèlerin Society: Crafting an Intellectual Blueprint
In 1947, amid the ruins of World War II, economist Friedrich Hayek convened a group of intellectuals in the Swiss village of Mont Pèlerin. Alarmed by what they saw as the creeping threat of collectivism – in forms ranging from Soviet communism to European social democracy and American New Deal liberalism – they founded the Mont Pèlerin Society (MPS). Its members included future Nobel laureates such as Milton Friedman and thinkers like Karl Popper, united by a belief in individual liberty, free markets, and skepticism of state intervention.
For decades, their ideas remained marginal, overshadowed by Keynesian consensus that viewed markets as inherently unstable and in need of regulation. Yet the MPS was not simply an academic club; it was an incubator for a long-term ideological project. Members recognized that shaping society required more than publishing papers. It demanded creating networks of influence that could reframe public discourse and policy.
Through connections with wealthy patrons and foundations, they seeded think tanks such as the Institute of Economic Affairs in the UK and later the Cato Institute in the US, nurturing an intellectual infrastructure that would stand ready when the Keynesian order faltered.
2. The Powell Memo: Strategic Mobilisation of Corporate Power
By 1971, the year the Mont Pèlerin Society celebrated its 25th anniversary, the world economy was shifting. Social movements were gaining momentum: civil rights, environmental protection, consumer advocacy, and anti-war protests were challenging corporate dominance. In this context, Lewis Powell, a corporate lawyer (later Supreme Court Justice), wrote a confidential memorandum to the US Chamber of Commerce titled “Attack on American Free Enterprise System.”
The Powell Memo warned that business was under existential threat from an increasingly critical public sphere. Its prescription was clear: corporations needed to mobilize politically, culturally, and intellectually. Powell urged businesses to:
Fund think tanks and university chairs to produce pro-business research.
Shape media narratives to favor market solutions.
Lobby aggressively against regulations.
Cultivate judicial influence to roll back environmental and labor protections.
In essence, the memo operationalized what Mont Pèlerin members had theorized: an organized, well-funded ideological movement to legitimize and entrench market fundamentalism. The Powell Memo was not written by MPS members, but it translated their neoliberal ideas into a concrete strategy for institutional, cultural, and political capture.
3. The End of the Gold Standard: Removing Monetary Constraints
As these ideological and strategic currents converged, a critical economic rupture occurred. In August 1971, President Richard Nixon announced the suspension of the dollar’s convertibility to gold, ending the Bretton Woods system that had governed global finance since 1944.
Under Bretton Woods, the dollar was pegged to gold ($35/oz), and other currencies pegged to the dollar. This system ensured monetary discipline, constraining money creation and limiting speculative capital flows. However, rising US deficits, the costs of the Vietnam War, and competitive pressures rendered the gold peg unsustainable.
By moving to a fiat currency system, where the dollar was backed only by government decree rather than gold reserves, the US unleashed a new era of monetary and financial flexibility:
Banks could expand credit creation without gold reserve constraints, fueling financialization.
Capital could flow freely across borders, facilitating globalization.
Governments could run deficits to support policies without immediate balance-of-payments crises.
4. The Synthesis: How Neoliberalism Rose
These three forces – intellectual, strategic, and monetary – came together to birth neoliberalism:
A. Intellectual Legitimacy
The Mont Pèlerin Society provided the ideological architecture, arguing that markets, not governments, allocate resources efficiently, and that individual freedom is best protected through market choice.
B. Strategic Mobilisation
The Powell Memo activated corporate America to institutionalize these ideas. Think tanks proliferated (Heritage Foundation, Cato Institute, AEI), and media narratives shifted towards skepticism of government and celebration of markets.
C. Structural Enablement
The end of the gold standard removed fiscal and monetary constraints, enabling deregulation, financial innovation, and global capital flows without the stabilizing discipline that Bretton Woods enforced.
5. The Outcomes: Wage Stagnation, Inequality, Financialization
The neoliberal era that followed was marked by:
Wage stagnation, as union power eroded under policies justified by neoliberal economics.
Rising inequality, driven by tax cuts for the wealthy and capital gains from financial assets.
Financialization, as deregulated banks expanded credit, prioritized shareholder value, and shifted profits from production to finance.
Declining labor share of GDP, as returns to capital soared.
These were not unintended side-effects. They were structural outcomes of policies rooted in the ideological belief that markets, left free, produce optimal outcomes – and in the strategic reality that such policies benefited capital holders at the expense of labor.
6. Conclusion: From Gold Discipline to Market Fundamentalism – and Beyond
In hindsight, the convergence of the Mont Pèlerin Society’s intellectual groundwork, the Powell Memo’s strategic roadmap, and the monetary liberation following the end of the gold standard created a perfect storm for neoliberal ascendancy. It was an era built upon the narrative that “There Is No Alternative” (TINA) to markets, entrenching financial dominance, wage stagnation, and inequality as if these were natural laws rather than deliberate political choices.
Yet if neoliberalism was constructed, it can be deconstructed and replaced. This requires more than technocratic policy change. It requires a politics rooted in listening, dignity, and truth-telling, alongside the strategic redesign of systems that make exploitation and inequality obsolete.
Like Khader El-Yateem and movements inspired by Mamdani’s approach in New York, the starting point must be to listen to people’s lived realities with humility and respect. Structural change cannot be imposed from above by experts alone. It must be built through relationships, by understanding the daily struggles of housing insecurity, wage theft, and environmental harm, and by organising around the priorities of real people rather than elite interests.
At the same time, we must expose the structural lies that neoliberalism depends on:
The lie that poverty is an individual failure rather than a systemic outcome.
The lie that there is no money for schools or healthcare while trillions flow to banks.
The lie that markets are neutral and self-correcting, rather than rigged to socialise losses and privatise gains.
Breaking these lies requires changing the narrative, but also changing the material realities that make them seem true. This means:
Shifting incentives so that wellbeing is no longer tied to endless growth and extraction.
Re-embedding finance to serve public purpose rather than speculative profit.
Building institutions that democratise economic power, from unions and cooperatives to participatory budgeting and public banks.
Creating intellectual and movement infrastructures that can sustain alternative visions with the same commitment the Mont Pèlerin Society gave neoliberalism.
The hardest lesson is this:
Neoliberalism will not be defeated by ideas alone, nor by politics alone, but by their integration – a politics that listens and organizes with dignity and truth, combined with a strategy to redesign systems so they no longer serve money over life.
Because in the end, the smartest strategy is not simply to fight the system, nor to retreat into abstract alternatives, but to listen deeply, tell the truth about power, organize courageously, and redesign our institutions so that they reflect care, fairness, and interdependence at their core.
This is how we reclaim the economy as a tool to sustain life in all its dignity and diversity, and build a world where the commons of knowledge, care, and nature are protected for all – not captured by the few.
Epilogue
History shows that what appears unchangeable is often just unchallenged. Neoliberalism’s rise was not destiny, but design. So too will be its end – authored by those bold enough to imagine and build an economy that serves life rather than capital, and to turn that imagination into collective action powerful enough to transform the world.
