Getting Tough or Rolling Back the State? Why Neoliberals Disagreed On A Guaranteed Minimum Income

Abstract

If poverty and inequality have formed the basic arsenal of free market capitalism’s critics, what did this system’s most prominent advocates offer as the solution to these problems in the mid- Twentieth Century, and how did they differ? In answering these questions, this article explores the division between free market economists on the benefits of a guaranteed income during the 1960s and ‘70s in the United States. In 1962, Milton Friedman published his own iteration of a guaranteed income in the form of a negative income tax, intended as a wholesale replacement for social programs that had defined the American welfare state since the New Deal.1 By this time, Friedman was emerging as the recognized face of what Phil Mirowski and Dieter Plehwe have called the “neoliberal thought collective,” the most prominent pro-market intellectual community in the world, organized since the 1940s in a transnational network of university economics departments and think tanks, connected by the central hub of the Mont Pelerin Society.2 Friedman was not alone in his support for a guaranteed income within this network, joined by the likes of George Stigler, Aaron Director, George Shultz, Arthur Kemp, Paul McCracken, Karl Popper, Ralph Harris and Arthur Seldon; but neither was he unchallenged, with Ludwig von Mises, Martin Anderson, Henry Hazlitt, Peter Bauer and Arthur Burns amongst those most vehemently opposed to such plans. The implications of these disagreements have received scant analysis even in works which have taken neoliberal welfare ideology as their focus. Close study reveals that its protagonists sought to destroy the welfare state by two means that were fundamentally irreconcilable.