The prioritisation of innovation, productivity, and growth over income and wealth distribution; technology as savior; government as a partner rather than a regulator of the private sector; market-based solutions to social and economic problems; and the overall emphasis on the individual initiative over collective action––this economic vision did not come from the political right as is often assumed. Instead, it was the brainchild of the political left––one that accepted the right’s criticisms of social democratic institutions without abandoning social democracy itself. This is the source of the concept of market-based development.

As economic policy, it might have made sense. But as a political platform, it had a major flaw. The goals––increased productivity, technological breakthroughs, and market-based solutions to social and economic problems––do not happen by themselves. Government can provide support and incentives, but who exactly was going to be incentivised?

All narratives need a protagonist, even in the realm of policy. The right-leaning neo-liberals had their hero: the property owner. The Washington Consensus and Structural Adjustment Program (SAP) promoters elevated “the market” to the status of omniscience incarnate. However, left-leaning neo-liberals had already attacked “establishment” institutions such as government and universities and certainly did not want to be seen as pro-corporate or pro-wealthy. Instead, they found their protagonist in the business version of the American pioneer, the cowboy, the rebel, the Great Man: the entrepreneur.

The left leaning neo-liberal’s entrepreneur was an upstart, an innovator, a disrupter of the status quo, the lone wolf who takes on the establishment and wins. He was the one who “created” growth. Charles Peters, the founder of the movement and author of 1982’s “A Neo-Liberal’s Manifesto”, put it this way:

Our hero is the risk-taking entrepreneur who creates new jobs and better products. … We want to encourage the entrepreneur not with Reaganite policies that simply make the rich richer, but with laws designed to help attract investors and customers. … We also favor freeing the entrepreneur from the kind of economic regulation that discourages healthy competition. … Risk is indeed the essence of the movement––the risk of the person who has a different idea in industry or in government. That is why we place such a high value on the entrepreneur. The economic, social, and political revitalisation we seek is going to come only through a dramatic increase in the number of people willing to put themselves on the line, to take a chance at losing all, at looking ridiculous.

It was a romantic image: a swashbuckler whose drive to innovate and create jobs and something new to make our lives better, never mind the more mundane motivations of independence, control, and money.

However, in this vision it was not just businesspeople who needed to become more entrepreneurial, it was everybody: “Americans have to begin to treat risk more as an opportunity and not as a threat” was the comforting advice of senator and future presidential candidate Bill Bradley. This also included the public sector. The left-leaning neo-liberal think tank, the Progressive Policy Institute (PPI), envisioned an entrepreneurial government that emphasised “efficiency” but was really a way to cut costs by shifting more responsibility onto citizens. It also suggested that the government should serve not as a service provider but as a “catalyst” in connecting citizens to the private sector.

Just after Clinton’s 1992 election, PPI also published “Mandate for Change” which called for “introducing choice, competition and market incentives into the public sector”. Since it “emphasise[d] economic growth generated in free markets as the prerequisite for opportunity for all”, it also outlined programs and initiatives for shoring up economic growth through the high-tech sector and for advancing free trade. Programs for addressing poverty and other social issues centered on market-based ideas like enterprise zones, microenterprise development, and welfare-to-work schemes. It also endorsed market-based cap and trade approaches to climate change.

Indeed, these ideas were eventually applied everywhere, including non-profit sectors of the economy such as hospitals, universities, and non-governmental organisations. The result was the blurring of the distinctions between the state, society, and the market. It led to a convergence of business and government that has made one largely indistinguishable from the other.

Yet just as the Washington Consensus framework and the SAPs that implemented them included no safeguards against the creation of a right-leaning neo-liberal economy, left-leaning neo-liberals soon found that they, too, had unleashed forces beyond their control. Washington Consensus author John Williams wrote regretfully about how his ideas were used as a synonym for neoliberalism or market fundamentalism, and eventually Charles Peters offered his own mea culpa after realising that his “growth without redistribution” model meant that the benefits from growth are unevenly distributed:

In the late seventies, there was this stagnation, and you desperately needed a rebirth of entrepreneurship. The neoliberals can’t take complete credit for this rebirth, because it was happening right as we were calling for it. It began to happen with people like Bill Gates and the Apple guy in their garages. Things were ready to explode. But as in so many revolutions that are desirable, it went too far. All these people got to be concerned not with just having the exciting new business, but with making more and more dough, to the point that it made no sense.  … I think in many, many areas, the [left-leaning] neoliberals, in effect, won. But in some cases, we won too much. For instance, the rebirth of capitalism produced such extremes that we then had to turn around and say no, that is wrong. … The situation has changed now. There began to be a need to address the terrible excesses of capitalism that occurred, and we began to hammer away at those.

But it is more than just a matter of unprecedented levels of inequality in income, wealth and, ultimately, political power. Or the 5,400 economic zones around the world and their 27 million mostly female workers where national laws and protections do not apply. Or even the entrepreneurworship. It is the autocratic tendencies that these risk-takers are increasingly demonstrating that is the greatest concern.

Another way to look at it is that when a policy that aims to increase investment in new technologies gets sold as promoting entrepreneurship, it is easy to drift from being pro-investment to being pro-investor. From there it is only a short step to plutocracy.

The concept also failed because it was also unrealistic to expect that sunrise industries in a limited number of sectors could drive growth in the entire economy. Today, total IT employment in the US is 5 million people, compared to 13 million each in retail and in transportation, 12 million in food and beverage, and 7 million non-doctors working in health care. Walmart alone employs 1.6 million people. In the decade from December 1999 to December 2009 after China’s accession to the World Trade Organisation, the US lost more than 5.8 million manufacturing jobs––more than the entire tech sector’s employment.

Perhaps the future could have been glimpsed with the failure of Atari itself, which happened in part because venture capital companies over-invested in cheaply designed copy-cat video games that bombed time after time and damaged the public perception of video games and its leading company. When Atari’s newest games flopped, the company lost consumer confidence. The company still exists, however, and it has several lines of business outside of video gaming, including video-game-themed hotels and cryptocurrency.


Ron Bevacqua is an Adjunct Research Fellow at the Griffith Asia Institute as well as the Co-Founder and Managing Director of ACCESS Advisory Inc.