Two philanthropies, the Hewlett Foundation and Omidyar Network, today committed a total of more than $41 million over five years to five academic institutions as part of a broader effort to change accepted notions about the way the economy works.
The effort is an attempt to challenge neoliberalism, an intellectual movement that began in the late 1940s that established broadly accepted principles on the role of markets and governments that became firmly established over the course of decades.
The intellectual framework that became known as neoliberalism developed by thinkers like Friedrich Hayek and Milton Friedman, resulted in policies to shrink the government, reduce government debt, open up trade, and deregulate the market that gained steam under the Reagan administration in the United States and under Margaret Thatcher’s watch in Britain.
Since then, policy makers have had too much faith in using a market-based approach to solving social ills, says Wayne Frederick, president of Howard University, one of the grantees.
“Neoliberalism has really dragged us into a certain lane in pursuing solutions,” Frederick said. “This project allows us to open up that mind-set and give us more options.”
Howard’s Center for an Equitable and Sustainable Society will use the money to study how both market forces and government regulation have contributed to health-care disparities, income inequality, housing insecurity, and other issues.
The 2008 recession and the widening gap between the rich and poor has made the failure of the neoliberal approach clear, say critics of neoliberalism, including Larry Kramer, president of the Hewlett Foundation.
According to Kramer, approaches used to describe different ways of thinking about society and the economy — like liberty versus equality, or central control versus free markets — are outdated and need to be replaced with “the next big intellectual movement.”
The idea, Kramer says, is to support a new generation of academics who in turn influence people at think tanks, the media, and policy makers who can boil down complex economic theory into an easy-to-understand nugget that an average member of the public can digest. Kramer uses “government is bad, markets are good” as an example of a neoliberal mantra that has taken hold among large part of the public.
“Policy ideas, even very good policy ideas with evidence, won’t stick unless they are undergirded by being part of” a broader framework of shared understanding.
(The Hewlett Foundation is a financial supporter of the Chronicle.)
Where the Money Is Going
In addition to the Howard University center, the support from Hewlett and Omidyar will go to Harvard Kennedy School’s Reimagining the Economy Project; the Johns Hopkins University Center for Economy and Society ; the Massachusetts Institute of Technology’s Shaping the Future of Work program, and the Santa Fe Institute.
Hewlett will provide $35 million in grants to four of the academic institutions, an expansion of its $50 million Economy and Society Initiative. Omidyar will provide $6.5 million of the total, to the Santa Fe Institute.
The Omidyar grant is part of its Reimagining Capitalism program, which also supports workers rights, trying to get corporations to think beyond shareholder interests, and addressing the ramifications of concentrations of power in the economy — whether in technology, pharmaceuticals, or agriculture. Over the past three years, Omidyar has awarded more than $60 million to the effort.
Other related grants from the Ford Foundation and Open Society Foundations are forthcoming.
Ford plans to make grants to institutions doing similar work in Africa, Asia, and Latin America, and Open Society is “exploring how best to support heterodox economic thinking” through its Open Society University Network, according to a news release from Hewlett.
Taking a Long View
The grants to universities are an attempt to draw interest from institutions in hiring researchers challenging current economic assumptions.
An annual conference is planned in Santa Fe to share ideas and promote research both with other academics and, according to Michael Kubzansky, chief executive of the Omidyar Network, with outsiders like think-tank leaders and Hollywood producers who want to change how the role of government and the economy is presented on screen.
A big short-term goal, Kubzansky says, is to develop a new undergraduate economics curriculum. Kubzansky says his two children, who both attended college after the 2008 recession, were using text books that suggested that raising the minimum wage would harm the economy or that increased government deficits kill growth. Those ideas, Kubzansky says, should be challenged.
Swapping out textbooks may be easier than the broader goal of instituting a new prevailing view on the role of markets and government. But neoliberalism had an assist from influential donors including Richard Mellon Scaife and Charles Koch.
“As a funder, we’re pleased to play the long game,” Kubzansky says. “We’d love to see traction sooner, but we are willing to take a while for these ideas to develop. Once they get in, they are very sticky and hard to dislodge.”
Buzz Phrase
One of the biggest challenges to the entire approach is defining just what “neoliberalism” means, suggests Bruce Caldwell, director of the Center for the History of Political Economy.
Neoliberalism is a buzz phrase, he says, that can mean just about anything and is usually used to pejoratively label an approach someone doesn’t like.
Caldwell, a Hayek biographer, downplays the role of foundations in boosting neoliberal policies in the 1980s. Privatization and deregulation became popular, he suggests, because of the pain inflicted by “stagflation” -— high unemployment and a listless stock market — that took hold in the 1970s.
“That was a natural reaction,” he says. “People didn’t need right-wing foundations to point it out.”
White House Interest
Kubzansky and Kramer are confident that their efforts will eventually bear fruit.
Kramer points to a number of grant makers involved in similar efforts including the Children’s Investment Fund Foundation, the Economic Security Project, the Nathan Cummings Foundation, Rockefeller Brothers Fund, Skoll Foundation, and the Wallace Global Fund.
Last year Jennifer Harris, who led the Hewlett Economy and Society Initiative for three years, left to join the Biden administration as senior director for international economics and labor at the National Security and National Economic councils. The appointment, Kramer says, is an indication that there is an interest at the White House in entertaining new ways to think about the role of government and its relationship to markets.
While plowing ahead on the intellectual work on neoliberalism is important, Kramer says, translating those efforts into policy is essential. Not only is neoliberalism not up to the task of reducing wealth inequality or the loss of jobs due to new technologies and automation, it is, in Kramer’s view, a key source of hyper-partisan conflict that threatens democracy.
“We don’t have the time the neoliberals had,” Kramer says.
