A quarter century of neoliberal thinking in education: misleading analyses and failed policies

Neoclassical economics focuses on the efficiency of a free-market system and the associated role of the public sector. As a school of thought, it has been around for over a century, with antecedents going back to the work of Adam Smith in the eighteenth century. As a school of thought, it has dominated western economics in the post-World War II era. Nonetheless, there have been disagreements and debates among neoclassical economists, perhaps none so fundamental as the one between those that, in the United States, have been called ‘liberal’ and ‘conservative’ economists, the former represented by Paul Samuelson and others out of MIT, and the latter represented by Milton Friedman and others out of the University of Chicago. The central difference is that the liberals see a substantial need for government intervention to have an efficient and equitable economic system while the conservatives see much less of a need for such intervention. Secondarily, there is a related dispute about the primacy of government fiscal policy (the liberals) versus monetary policy (the conservatives). In the 1970s, the conservatives were strengthened by an offshoot called ‘public choice theory’, whose proponents made an even more extreme argument against government than did the conservatives. Public choice theory conceded that the free market might fail to operate well and therefore be inefficient and inequitable without government intervention. However, it argued, government was so incapable of making successful interventions that it was better not to have it intervene in the first place. In sum, public choice theory argues that government failure is worse than market failure. While this liberal/conservative split was reflected in the economics profession, for many years it was not very much reflected in practice. With some exceptions, a liberal version of neoclassical economics dominated public policy in the United States from the New Deal through the 1970s; and in many other countries as well. However, beginning in 1980, there was a visible sea change that brought conservatives and public choice economists to power. Ronald Reagan was elected President of the United States. He combined forces with Margaret Thatcher, already Prime Minister in the United Kingdom, leading to sweeping changes in national and international rhetoric and policy. International institutions like the World Bank and the International Monetary Fund (IMF) changed hands and direction. The result has been a ‘Great Experiment’ that has systematically altered public policy on a global scale. Nowhere has that been more evident than in the sweeping change in economic