A prosecution, a defense, and a calibrated verdict on a five-link causal chain — argued from the scholarly literature, link by link.
“The pursuit of neoclassical economic theories — advocated, designed and implemented by Tier-1 management consultancies in the post-war era — has inadvertently and significantly contributed to upward wealth redistribution and inequity, declining living standards and rising costs; and the current reversion to national-capitalism, tariffs, mercantilism, militarisation, populism and anti-immigration is partly an outcome.”
Step 0 · Pin down the terms
Loose terms make the hypothesis look truer — or falser — than it is. The investigation holds itself to these distinctions throughout.
The argument as a chain
Each link is judged on its own evidence. The bar shows how well the link holds as stated. Select any link to jump to its debate.
The case for
Gary Gerstle's The Rise and Fall of the Neoliberal Order documents a distinct “neoliberal order” that emerged in the late 1970s and became so dominant that both parties governed within it — Reagan and Thatcher built it; Clinton and Blair ratified it. Marketisation, global economic integration and deregulation became bipartisan orthodoxy.[1]
The policy template was codified and exported: John Williamson's 1989 “Washington Consensus” bundled fiscal discipline, liberalisation, privatisation and openness into a programme that the IMF and World Bank pressed on dozens of economies.
The case against (or qualifying)
Largely concede that the turn happened — but resist the label. The intellectual movement originated with academic economists and intellectuals: Hayek and Mises convened the Mont Pèlerin Society in 1947; Friedman and the Chicago School carried it forward.[2] Calling the result “the pursuit of neoclassical economics” conflates a broad academic field — one that also produced the theory of market failure, externalities and asymmetric information — with a narrow, popularised policy slice.
Slobodian even argues the project was less about shrinking the state than about insulating markets from democracy via supranational rules (the WTO) — a different animal from textbook “free markets.”
Cross-examination
The dispute is not whether the liberal turn occurred — it did — but what to call its intellectual parent. The policy programme drew on a selective reading of theory, not the discipline whole. That distinction matters enormously for Link 02, where the thesis assigns authorship.
Verdict
The case for
Mazzucato & Collington's The Big Con casts consultancies as advisors, legitimators and outsourcers that hollow out the capability of firms and states — the transmission belt converting doctrine into daily practice.[3] Christopher McKenna's history shows elite firms reshaping corporations, non-profits and the state from the 1950s onward.[4]
The fingerprints are specific: McKinsey's “overhead value analysis” (John Neuman, 1975) helped institutionalise middle-management downsizing, and the strategy houses diffused shareholder-value management, offshoring playbooks and New Public Management across the public and private sectors.[5]
The case against (or qualifying)
This is the chain's weakest joint. The doctrine was authored by academic economists and political movements — not consultancies. Shareholder primacy traces to Milton Friedman's 1970 essay and to Jensen & Meckling's agency theory, not to a consulting memo. Treating consultants as the designers of the paradigm is a category error.
Consultants are downstream diffusers and implementers. The counterfactual bites: business schools, institutional investors, takeover law and the financial press were independently propagating the same practices. Strip out the consultancies and much of the trajectory likely still occurs.
Cross-examination
Split the claim into the three verbs. Originate the doctrine: false. Legitimate and diffuse it: well-supported. Implement specific practices: well-supported. The hypothesis's strong verb — “designed” — is the one the evidence cannot carry. “Amplified and operationalised” survives; “authored” does not.
Verdict
The case for
Piketty's Capital in the Twenty-First Century documents the US top 1% commanding roughly a fifth of income and a third of wealth, with the top 0.1% income share climbing from about 3.4% in 1980 toward 10%.[6] Milanovic's “elephant curve” shows the global top 1% and the Asian middle capturing the gains from 1988–2008 while the Western middle and working classes stagnated.[7]
Lazonick quantifies the corporate channel: across 2003–2012, S&P 500 firms returned about 54% of earnings as buybacks and a further 37% as dividends — capital diverted from wages and investment to shareholders.[8] Labour's share of national income fell across the advanced world over the same decades. The timing tracks the post-1980 turn closely.
The case against (or qualifying)
Inequality rose — but attribution to the policy turn is contested. Goldin & Katz's The Race between Education and Technology makes skill-biased technological change versus the supply of education the primary driver of the US wage structure, with trade and policy secondary.[9]
Automation, superstar-firm concentration, demographics and — crucially — domestic tax choices (slashing top marginal rates) all contribute. Much “upward redistribution” reflects political decisions about tax and transfers, not market liberalisation as such.
Cross-examination
Co-movement is not causation: inequality and liberalisation rose together, but so did computing. The defensible position is that liberalisation, financialisation and shareholder primacy were significant contributors among several — not the sole engine. The thesis overreaches if it claims monocausality, holds if it claims “a major contributor.”
Verdict
The case for
For Western working and middle classes the dip in the elephant curve is real: decades of stagnant real wages. The China shock — Autor, Dorn & Hanson — lowered manufacturing employment and depressed wages in exposed US labour markets, with effects that persisted for years rather than reallocating smoothly.[10]
Case & Deaton's “deaths of despair” document rising mortality and falling wellbeing among less-educated Americans — a living-standards collapse in the most exposed communities.[11]
The case against (or qualifying)
Globally the claim inverts. Extreme poverty fell from roughly 2 billion in 1990 to about 648 million in 2019 — on the order of 1.5 billion people lifted out, overwhelmingly through trade-led growth in Asia (China alone ~800 million).[12] “Declining standards of living” is true for specific groups in rich countries and false in global aggregate.
And the recent cost-of-living spike (post-2021) is driven mainly by the pandemic, energy shocks and supply chains — a different causal story from the long-run liberalisation thesis.
Cross-examination
The claim only holds once population and period are specified. Aggregation hides the distribution: the same globalisation that stagnated the Ohio machinist lifted the Shenzhen factory worker. The thesis needs the explicit “Western working-class” framing — stated globally and over the long run, it is simply false.
Verdict
The case for
The causal evidence is real and replicated. Autor and colleagues — “Importing Political Polarization?” — find trade-exposed US districts removed moderates and shifted toward Republicans between 2000 and 2016.[13] Colantone & Stanig show import competition raising far-right and Leave voting across Western Europe and in Brexit.[14]
Rodrik provides the framework: globalisation shocks fuel populism through demand- and supply-side channels, often working via culture and identity.[15] Gerstle dates the neoliberal order's fall to the Iraq War and Great Recession, culminating in the Trump and Sanders insurgencies.
The case against (or qualifying)
Economic shocks are one driver among several. Norris & Inglehart's “cultural backlash” finds cultural values a stronger predictor of populist voting than economic insecurity.[16] The 2008 financial crisis, immigration salience and social media are major independent forces, and trade-shock effect sizes — though real — tilt elections at the margin rather than determine them.
Militarisation and defence budgets owe far more to geopolitics (Russia, China) than to any inequality chain — they sit largely outside the thesis.
Cross-examination
Directionally supported but over-broad. Tariffs and economic populism map reasonably onto trade dislocation; the anti-immigration turn is partly economic, partly cultural; militarisation is mostly exogenous. The honest reading: a real contributing cause for part of the backlash, co-equal with culture and geopolitics — not the master key.
Verdict
Synthesis
A chain of five individually “plausible” links can still be jointly weak — and that is what we find. Links 01 and 03 are well-grounded; Link 05 is partially so; Link 04 is true only once you fix the population; and Link 02 — the load-bearing claim that consultancies advocated, designed and implemented the doctrine — is the weakest joint in the argument.
The defensible reformulation: a broad neoliberal policy order, authored by academic economists and political movements, reshaped distribution and living standards unevenly, and that dislocation has fed — alongside culture and geopolitics — the nationalist-populist turn. Tier-1 consultancies were powerful amplifiers and operationalisers of that order: accelerants, not authors.
Internal consulting records showing firms shaping doctrine rather than diffusing it; causal identification isolating consulting penetration from technology and tax policy.
Evidence the same trajectory unfolded where consulting penetration was low; a stronger showing that technology and culture dominate distribution and the backlash.
Evidence base
Works and data series relied on, grouped by the link they chiefly support. Citations point to publishers, working papers or primary summaries; quoted figures are drawn from these sources.