U.S. deindustrialization and financialization redirected the nation’s economic center of gravity from the factory floor to Wall Street. This transformation reflected a broader ideological turn—away from the industrial-age belief that “what’s good for GM is good for America” and toward a new guiding principle: “what’s good for Wall Street is good for America.”
The rise of limited government ideals, unfettered market capitalism, and the Ronald Reagan dictum that “government is not the solution to our problem; government is the problem” was not incidental. These ideas helped normalize and legitimize the growing dominance of the Wall Street–Washington axis.
Reagan’s Ideology and Its Core Tenets
Ayn Rand’s Atlas Shrugged was not a direct blueprint for Reaganism, but it played a significant role in shaping the broader ideological environment of American conservatism, particularly its anti-statist and pro-market elements. Reagan drew selectively from this intellectual current, fusing it with traditional conservative values and the practical exigencies of Cold War politics. In this sense, Rand functioned more as a philosophical catalyst than as a policy architect, providing the moral and intellectual scaffolding for a shift in the American political and economic mindset.
Central to Reagan’s ideology was a firm commitment to limited government. He championed the notion that government intervention should be minimized, arguing that markets, rather than bureaucrats, were best suited to allocate resources efficiently. This small-state philosophy dovetailed with a broader embrace of unfettered capitalism, reflected in policies such as deregulation, lower taxes on corporations and high earners, and a strong belief in self-correcting markets. Reagan’s rhetorical skill reinforced these principles: his famous assertion that “government is not the solution to our problem; government is the problem” framed public perception, casting state intervention in a consistently negative light. This perspective not only influenced attitudes toward fiscal and social policy but also shaped broader debates over industrial strategy, financial regulation, and technological development, ultimately embedding the primacy of market logic at the heart of the Reagan Revolution.
Connection to the Ideological Shift
During the industrial era, large corporations such as General Motors and Ford were widely regarded as engines of national economic strength, justifying targeted industrial policies and regulatory protections. Economic success was often equated with industrial growth, and the state played an active role in supporting key sectors. This framework, rooted in the New Deal and Depression-era reforms, emphasized the legitimacy of government intervention to stabilize markets and promote long-term national development. The intellectual and regulatory foundations of this industrial-era paradigm persisted for decades, shaping how Americans understood the relationship between business and the state.
The Powell Memorandum of 1971, while not a formal law or executive directive, represented a decisive strategic shift in this intellectual landscape. Its purpose was not to repeal specific New Deal regulations directly but to challenge the broader regulatory framework and the ideological assumptions underpinning it. By framing corporate America as a political actor with both the capacity and responsibility to defend its interests, the memo laid out a comprehensive strategy for influencing public opinion, shaping policy debates, and building networks of power. Through the creation and expansion of think tanks, lobbying groups, and legal advocacy organizations, businesses were encouraged to engage systematically in the ideological and regulatory arenas, establishing enduring institutions that would promote conservative economic thought.
The influence of the Powell Memo became particularly evident during the Reagan era. Although Ronald Reagan did not author the document, he inherited and skillfully leveraged the infrastructure it had inspired. By 1981, a dense network of conservative organizations and corporate allies existed to support and amplify his policy agenda. This alignment of ideological vision and institutional capacity facilitated the rapid implementation of Reaganomics, accelerating the shift from an industrial-state framework toward a smaller state and a more market-driven political economy. Policies aimed at deregulation, such as the loosening of Glass-Steagall restrictions and the expansion of derivatives trading, reflected this ideological transformation, empowering Wall Street to accumulate unprecedented financial leverage and influence.
Equally significant was the accompanying cultural shift. The narrative that markets inherently knew best reframed the national conception of prosperity. No longer was industrial production or manufacturing prowess the measure of economic health; instead, the financial sector and shareholder value were increasingly treated as the primary drivers of national well-being. In this new intellectual climate, what was good for Wall Street came to be equated with what was good for America, a stark departure from the industrial-era ethos that had defined the nation’s economic and political thinking for much of the twentieth century. Over time, this transformation not only reshaped regulatory priorities but also reoriented public expectations about the role of government, the purpose of corporate activity, and the sources of national prosperity.
Mechanisms of Influence
During the late twentieth century, Ronald Reagan’s famous assertion that “government is not the solution to our problem; government is the problem” became more than a rhetorical flourish; it crystallized a strategic ideological shift that reoriented the United States’ national priorities. By framing government intervention as inherently inefficient, Reagan delegitimized the intellectual and political foundations of industrial policy, Keynesian planning, and labor movements. This rhetoric provided a powerful form of soft power for entrenched financial and technocratic interests, enabling them to reshape national strategy toward deregulation, capital mobility, and financialization without encountering the same democratic scrutiny typically directed at industrial or labor-centered policies.
Reagan’s language normalized the worldview of Wall Street, naturalizing the principles of short-term returns, shareholder primacy, and free capital flows as synonymous with the national interest. Treasury officials and the Federal Reserve increasingly treated financial stability as a proxy for national strength, reinforcing the perception that the fortunes of financial institutions were inseparable from the health of the country. In doing so, these institutions, together with the agencies that oversaw them, became mutually reinforcing centers of influence, creating a systemic “deep state” that was not conspiratorial in nature but structurally embedded.
The mechanisms through which this influence operated were multifaceted. Technocratic agencies such as the Treasury, the Fed, and the State Department maintained continuity across administrations, allowing their long-term priorities to shape policy independently of electoral cycles. Elite networks—including Wall Street financiers, legal professionals, and policy think tanks—actively shaped the policy agenda, ensuring that deregulation and market-oriented reforms were presented as logical and inevitable. Policy capture occurred as financial institutions grew unchecked, embedding their worldview into the machinery of governance, while public opinion was molded by the pervasive ideological narrative that government intervention was inefficient and industrial or labor-centered strategies were outdated.
As a result, the rise of finance as a political and economic force was accompanied by the alignment of Wall Street’s interests with perceived national priorities. The strategic rhetoric and regulatory reforms of this period facilitated a transfer of power away from industrial and democratic constituencies toward financial elites, who were increasingly able to influence both the structure and direction of national policy. In this environment, long-term industrial planning and labor advocacy were systematically de-emphasized, while financial stability, capital mobility, and short-term returns came to dominate the national strategic imagination. This era thus marked a profound transformation in the relationship between ideology, governance, and economic power in the United States.
Conclusion
Reagan’s ideology did not single-handedly produce the economic and political shift toward financialization, but it played a crucial legitimizing role. By framing government intervention as inherently problematic, it delegitimized industrial policy, regulatory oversight, and state-led economic planning, eroding the intellectual and social foundations that had previously justified targeted support for manufacturing and national investment. In doing so, Reaganism created an environment in which skepticism of government became politically and culturally acceptable, even desirable, allowing the recalibration of economic priorities along market-centric lines.
Within this ideological framework, the ascendancy of Wall Street and the financial sector gained both social and political sanction. The emphasis on limited government, unfettered capitalism, and the rhetoric of individualism made it acceptable to prioritize shareholder returns, capital mobility, and financial-sector growth over the traditional industrial base and long-term national investment. What had once been viewed as central pillars of national economic strength—robust manufacturing, strategic planning, and industrial policy—were reframed as secondary to the imperatives of market efficiency and short-term profitability. In effect, Reagan’s ideology provided the rhetorical and cultural scaffolding that allowed financial interests to dominate the economic landscape, reshaping both policy priorities and national economic identity.