In 1964, long before the New Deal era reached its high-water mark, the seeds of the Reagan era were planted. Barry Goldwater won the Republican presidential nomination on a small-government platform. Voters rejected him. His supporters and intellectual allies then retreated into think tanks, journals, and other civil society organizations funded by wealthy donors. From there, they built the modern conservative movement.
Or at least, that is one way of telling the beginning of the story.
The political successes of the conservative movement have always had more to do with cultural backlash than economics. Two forms of backlash stand out in particular: racial hostility toward blacks in the wake of the civil rights movement, and a more general revulsion toward the upending of traditional authorities and norms during the cultural liberalization of the 1960s and 1970s. Against this backdrop, however, the public intellectual face of modern conservativism has been strongly defined by economic policy.
The intellectual foundations of the modern conservative economic ideology can be found in works like Milton Friedman’s Capitalism and Freedom, published in 1962. As the title suggests, the book argues that classical liberal markets and political freedom go hand in hand. This argument also appears in Friedrich Hayek’s The Road to Serfdom, another keystone of modern conservative economic thought, although one that lies outside the American economic mainstream.
Capitalism and Freedom offers a high-level theory about the need for small government and classical liberal markets—and presents this theory in easily communicated rhetoric that appeals to widely shared American values, especially freedom. The book also offers an assortment of concrete policy prescriptions, such as the use of school vouchers, and the replacement of progressive income taxes with a flat tax. By connecting an overarching theory of modern government with specific policy prescriptions, Friedman offers something extremely powerful: a unified vision of the proper role of government to contrast with the vision of the New Deal. While the New Deal presents government as a force for freedom, Friedman’s vision places government largely in opposition to freedom. The smaller the government, the more free citizens will be. What makes Friedman’s book so powerful, I would argue, is that it offers a widely appealing general framework for thinking and talking about the role of government, alongside policy prescriptions that are concrete enough to be included in a campaign platform or a bill.