* Biersteker, Thomas. 1994. "The Triumph of Liberal Economic Ideas in the Developing World." in Global Change, Regional Response: The New International Context of Development, edited by Barbara Stallings. Cambridge: Cambridge University Press.
Biersteker describes the world before neoliberalism as an era of global Fordism, "a regime of accumulation characterized by mass production, a sharing of value added between capital and labor, and corporate profit stability" (p. 193). This was combined with embedded liberalism - "Keynesian intervention, extensive social legislation, and the construction of the welfare state" (p. 193).
Both Bierstaker and Harvey refer to the 1950s and 1960s as embedded liberalism, and both say that it began to fall part with the stagflation of the 1970s. Harvey points to a backlash from elites who did not like having a smaller share of the pie during the 1950s and 1960s, who used neoliberalism as a tool to increase their own wealth and power. Biersteker does not.
Biersteker says that the 1960s and 1970s were decades of "unprecedented economic nationalism, a growing role for state intervention in the economy, and experimentation with variants of socialism and self-reliance" (p. 174). The development thinking of the 1970s was basically dependency theory: "A basic premise of much development thinking during this period was that the structure of international economic relations was biased against the countries of the developing world. The structure of the international system, rather than characteristics internal to developing countries, was identified as the principle source of underdevelopment. Development was viewed as qualitatively, even profoundly, different in the North and South, to the extent that laws of neoclassical economics were assumed not to apply equally in the developing world" (p. 176).
To get from there to neoliberalism, Biersteker points to a confluence of ideas, interests, and institutions needed to bring a new school of development thinking to the fore. He says the biggest shift was the notion that "the principal obstacle to development was to be found within developing countries themselves" (p. 177). Modernization Theory also blames underdeveloped nations for their own underdevelopment, but Modernization Theory blames their traditional values. Neoliberalism instead blames it on "decades of unwise government intervention in the economy... Violation of the basic (universal) laws of neoclassical economics was considered the source of the main problems" (p. 177).
Under neoliberalism "development was increasingly defined in terms of the growth of productive capacity, and concerns with distribution and the provision of basic needs were shunted to the side - at least for the time being. The first imperative of development was to eliminate the distortions of state intervention and enable the "magic of the market" to run its course." (p. 178). This meant a shift away from ISI (import substitution industrialization) toward promoting exports of any kind (industrial products or otherwise). Here, Biersteker gives an explanation of the policies that essentially make up the Washington Consensus - currency devaluation to promote exports, trade liberalization, cutting subsidies,
Within academia, neoliberalism "gained new force, visibility, and legitimacy" during the late 1970s and early 1980s (p. 183). That alone did not lead developing nations around the world to adopt neoliberalism. What ultimately did it was the global recession of the early 1980s. Biersteker mentions a number of factors, including a collapse in commodity prices, and says "Because this system-wide shock was transmitted to different parts of the developing world through various filtering mechanisms, depending on their mode of integration with the world economy, it affected different countries in different ways at different times" (p. 185). This goes to his point that the adoption of neoliberalism was uneven.
However, the recession of the early 1980s coincided with a sense that "the policies of the past had not worked and something new should be considered" (p. 185). But the ideas needed interests and institutional bases of support. It was the IMF and the World Bank who gave these ideas a "crucial international backing" (p. 186).
Here's how Biersteker sums it up:
"On reflection, three factors were especially important: (1) the shock of the early 1980s recession, (2) the fact that the system-wide shock coincided with a historical opening because of the perceived failure of the policies of the past, and (3) the presence of a reinvigorated set of liberal economic ideas, backed by critically placed domestic interests within the state and reinforced strongly by international institutions" (p. 186-187).
I am mentally interpreting that as more or less the same as David Harvey's summary of it - that the embedded liberalism of the 1950s and 1960s were no longer working by the time the stagflation of the 1970s hit, so something else was needed, and banks were awash with petrodollars that they were loaning willy nilly to developing nations' governments, so when the Volcker shock hit, many countries were unable to pay back their loans, and the IMF hit them with structural adjustment programs requiring them to implement neoliberal economic policies.