If Volcker symbolized the neoliberal turn in monetary policy, Greenspan embodied its financial side. He saw enough of the late-1990s stock-market mania to warn of “irrational exuberance,” but he treated the bubble as something the Fed should not seriously confront and continued to promote deregulation, including the dismantling of Glass-Steagall and the resistance to controls on derivatives.
That was not merely an error of forecasting. Greenspan’s faith in self-regulating finance helped produce an economy in which asset prices and executive compensation surged while wages stagnated. Financial deregulation and the gains accruing to finance were central to the rise of inequality, together with the destruction of unions and the weakening of workers’ bargaining power that had begun under Volcker.
The political consequences were predictable. Rising inequality, economic insecurity, and the sense that democracy no longer responds to ordinary people created fertile ground for the radical right. Greenspan’s late admission that laissez-faire had failed was not meaningless, but it was too little and far too late. By then the financial crisis had already revealed what his market discipline meant in practice, private gains, public rescues, and a more unequal and politically unstable society.
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