The Hewlett Foundation launched the Madison Initiative to tackle the problem of democratic dysfunction, with a strategy focused on the practice of politics — looking for levers to reduce or mitigate the tribalism that prevents our elected officials from working together effectively. Yet finding ways to address societal problems is not solely a matter of fixing how politics is practiced or assuring that citizens receive trustworthy information. It is also a matter of ideas: of finding plausible solutions around which agreement and public acceptance are possible. Unfortunately, today’s prevailing intellectual paradigm — which has come to be labeled “neoliberalism” — is no longer up to the task. However well this free market orthodoxy suited the late 20th century, when it achieved broad acceptance, it has proved unable to provide satisfactory answers to problems like wealth inequality, wage stagnation, economic dislocation due to globalization, and loss of jobs and economic security due to technology and automation. Worse, it has become one of the principal sites of hyperpartisan conflict.

Yet circumstances are ripe for the emergence of a new intellectual paradigm — a different way to think about political economy and the terms for a new 21st-century social contract. Helping develop and communicate such ideas is a task well suited to philanthropy, and one in which the Hewlett Foundation is well positioned to participate. In 2018, the foundation allocated $10 million to be spent over two years to explore this possibility.

This paper – a public version of the memo from the foundation’s president to its board – elaborates the thinking behind the request for funding. Parts I-III recount how the current neoliberal paradigm became dominant, including the pivotal role philanthropy played in its rise. Part IV draws lessons from this history to explain why conditions at present seem favorable for replacing neoliberalism with something better suited to today’s circumstances and problems. This is followed in Part V by a discussion of how philanthropy can help support such a change.