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The Politics of Free Markets

The Rise of Neoliberal Economic Policies in Britain, France, Germany, and the United States

The attempt to reduce the role of the state in the market through tax cuts, decreases in social spending, deregulation, and privatization—“neoliberalism”—took root in the United States under Ronald Reagan and in Britain under Margaret Thatcher. But why did neoliberal policies gain such prominence in these two countries and not in similarly industrialized Western countries such as France and Germany?

In The Politics of Free Markets, a comparative-historical analysis of the development of neoliberal policies in these four countries,Monica Prasad argues that neoliberalism was made possible in the United States and Britain not because the Left in these countries was too weak, but because it was in some respects too strong. At the time of the oil crisis in the 1970s, American and British tax policies were more punitive to business and the wealthy than the tax policies of France and West Germany; American and British industrial policies were more adversarial to business in key domains; and while the British welfare state was the most redistributive of the four, the French welfare state was the least redistributive. Prasad shows that these adversarial structures in the United States and Britain created opportunities for politicians to find and mobilize dissatisfaction with the status quo, while the more progrowth policies of France and West Germany prevented politicians of the Right from anchoring neoliberalism in electoral dissatisfaction.

280 pages | 18 line drawings | 6 x 9 | © 2006

Economics and Business: Business--Industry and Labor

History: American History, European History

Political Science: Comparative Politics

Sociology: Individual, State and Society


The Politics of Free Markets makes a substantial, original, and controversial contribution to discussions of neoliberalism, taxation, and welfare policies. It displays the strengths of institutional analysis, but more so than most of its companions in that field it clarifies how political institutions offer opportunities and threats to political entrepreneurs. By incorporating U.S. experience into a tight comparison, furthermore, it strikes multiple blows against American exceptionalism. The book should stir a vigorous debate among scholars and policy advocates.”--Charles Tilly, Columbia University


Charles Tilly | Charles Tilly

“Monica Prasad’s book is a model of rigorous comparative historical analysis. By systematic examination of several policy arenas in four major democracies, she uncovers the bewildering varieties of neoliberalism. Prasad’s analysis destroys facile single-variable accounts, emphasizing the complex interaction of history, structure, and opportunistic action that made the current neoliberal world. Massively documented and carefully theorized, Prasad’s book engages the most fundamental issues of modern political economy, from taxation to industrial governance and welfare provision, as well as the processes and institutions of democratic governance itself. Often controversial and always interesting, it is must reading for anyone interested in the political economy of our time.”

Andrew Abbott | Andrew Abbott

"A significant and powerful contribution to an ever-more sophisticated comparative political economy literature. It combines rich empirical detail with sophisticated analysis, skilfully and persuasively illustrating the flaws in some of the alternative accounts."

David Bailey | Political Studies Review

Table of Contents

1. Power to the Middle Classes: Entrepreneurs and Ideologues in the Reagan Revolution
2. Populist Revolutionary: Margaret Thatcher and the Transformation of the British State
3. Coalition Politics and Limited Neoliberalism in West Germany
4. France: Neoliberalism and the Developmental State

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