...“Reeling from intense foreign competition in the 1970s, many sectors of [American] big business, including several of the most capital-intensive multinational ones, such as pharmaceuticals, paper, and petrochemicals, lashed back at what they claimed were ‘unduly burdensome’ government regulations—in particular ‘social’ regulations of the environment and worker safety that fell particularly hard on these sectors.” As many studies have shown, for example David Harvey’s A Brief History of Neoliberalism (2005), these regulated industries launched major efforts to influence public opinion and elite attitudes, e.g., by sponsoring studies that downplayed environmental risk, cultivating ties with university researchers, supporting “neoconservative” journals, funding broad campaigns extolling the virtues of “free markets,” and creating new conservative policy institutes like the Heritage Foundation. By the mid-1970s, U.S. businesses were spending more than $400 million a year on “advocacy advertising,” much of it directed against government constraints on business. By the end of the decade it was up to $1 billion annually. This whole neoliberal corporate movement weakened the Democratic base in the business community and in the country as a whole.

–I can’t resist inserting a polemical digression here. The authors mention in a footnote that John S. Saloma III gives a detailed survey of all these propagandizing activities in Omnibus Politics: The New Conservative Labyrinth (1984). “His study,” they say, “is one of the very few to bring out the importance of the astronomical sums of money lavished on these activities, in contrast to the customary rhetoric about the importance of ‘new ideas.’” They’re right about the latter: intellectuals love to insist on the importance of “powerful new ideas” in explaining changes in society and politics. It’s predictable—predictably bourgeois in deflecting attention from class and institutional structures—but it’s stupid. John Maynard Keynes gave a classic exposition of this idealist philosophy in the very last paragraph of his General Theory of Employment, Interest and Money (1936), which has stroked the egos of academics for generations:

"…[T]he ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. [?!] Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil."

These are backward fantasies, which grow out of a poor sociological imagination. The point is that the ideas that come to be accepted as gospel are those useful to vested interests, which are the entities that have the resources to propagate them. (In the typically bourgeois language of impersonal ‘automaticity,’ Keynes refers to “the gradual encroachment of ideas.” But ideas don’t spread of themselves; they are propagated and subsidized by people and institutions whose interests they express. This is why, as Marx said, “the ruling ideas of a society are the ideas of its ruling class,” which has the resources to spread them.) Keynes’ famous book itself contributed not at all to the so-called Keynesian policies of FDR and Hitler and others; in fact, such policies were already being pursued by Baron Haussmann in France in the 1850s, because they were useful in giving employment to thousands of workers and raising aggregate demand and thereby economic growth. Is it likely that had Keynes not published his book in 1936, the U.S. government during and after World War II would have pursued radically different, un-Keynesian economic policies? Hardly. Because they were useful to vested interests, those policies were bound to be adopted—and economists, tools of the ruling class, were bound to systematize their theoretical rationalizations sooner or later.

Incidentally, in some form the "Keynesian" ideas had been around already in the late nineteenth century, long before Keynes, among liberals and socialists, “under-consumptionists” like John Hobson and many others. But they didn’t become conventional wisdom until major parts of the ruling class had taken them up between the late 1930s and early 1970s. After their usefulness had ended, in the 1970s, they were abandoned, and a new, neoliberal, ideological crusade began, which was predictably successful because it was waged by the most powerful actors in society. The falseness and superficiality of the “supply-side” ideas of Reaganomics were no great hindrance to their political success, because theory doesn’t matter in the real world—despite what self-apologists like Keynes and other liberals (Paul Krugman, etc.) might think...