Why did the Cold War come to a peaceful end? And why did neoliberal economics sweep across the world in the late twentieth century? In this pathbreaking study, Fritz Bartel argues that the answer to these questions is one and the same. Communist and capitalist states alike were scarred by the economic shocks of the 1970s. Why did only communist governments fall in their wake? Western democracies were insulated by neoliberalism. While austerity was fatal to the legitimacy of communism, democratic politicians could win votes by pushing market discipline.