HARVEY: And the corporations at that point started to get together. And this was crucial because
the capitalist class at that time was fairly well defined. It was the big, older companies,
and the big steel companies, and some of the big investment bankers. And it was fairly
narrow and it's fairly cohesive and coherent. And they started to set up all kinds of things
in order to be able to recuperate their power and their influence. They felt
by 1975 that their power and their influence had been seriously compromised and they were
determined to get it back. Furthermore, their wealth was being eroded by inflation
and their wealth was being eroded also by the collapse of some of these corporations.
So, big wealth started to organize, and it organized in a variety of ways.
One of the ways was to get together and create something called the "Business Roundtable."
The Business Roundtable comprised about 60% of the US GDP at the time,
heads of all those, and they all sat together and said, "Okay, what are we gonna do?"
There was a famous memo from Lewis Powell (who became a supreme supreme court justice) in which
he said basically the anti-corporate thing has gone too far, we need to
mobilize all of our powers against it, and part of it is going to be an ideological
thing (he didn't say this in the memo but this is how it panned out), part of it's going to be
an ideological thing in which we're going to sort of attack the sorts of things that are being said
in the race stuff and the anti-war stuff. And so we're going to attack it and we need institutions
which will attack it. And if you go back you'll certainly find that all of these sort of
wealthy donors [were] setting up think tanks: The Manhattan Institute, Olin foundation, all of them,
the National Bureau of Economic Research also which is very respectable.
All of them were producing knowledge, producing understanding. And Powell and the rest said
basically there's ideological conflict inside of the universities. The universities have
actually opened themselves up to radical thinking and it's going to be very difficult to get the
universities to kick that aside. So we can't have a frontal assault. We're going to use-- they
didn't say this but it's essentially a Maoist strategy of surrounding the city with by occupying
the countryside. And in effect what they set out to do throughout these all these think tanks was
to surround the universities with an alternative reality, an alternative set of think tanks,
very well financed, well paid, and all the rest of it. And they secondly needed to mobilize
political support ,and this was something which again was very very significant.
So there was the situation about 1975. New York City is in is effectively bankrupt,
run by the Municipal Assistance Corporation and the Municipal Assistance Corporation
lived under the following situation: bondholders will not suffer any loss whatsoever.
What happened was that all the receipts, all of the tax receipts to New York City flowed into the
Municipal Assistance Corporation. The Municipal Assistance Corporation paid off the bondholders
then he gave whatever was left to the New York City budget, which meant that
the New York City had to lay off all kinds of people, had to suspend all kinds of programs,
had to really go into an austerity mode. Fierce austerity, which was created considerable. But
this was something very, very significant, and it's the heart of what neoliberalism is. And
in many ways this New York City thing is what I call the birth of neoliberalism,
because it was there that they came up with the idea that the bondholders should never suffer.
They should always get their thing but the way that that should pay off any kind of debt of
this kind was to be through austerity measures, administered to the population through government,
either state governments, or national governments, or whatever. It was going to be austerity.