The truth about neoliberalism
It is the fear of the nation state as a democratic force that underpins the neoliberal project.
This is the second essay in a two-part series by Phil Mullan exploring the political and economic creed of globalism. The first part, exploring the ideology of globalism, is published here.
‘Neoliberalism’ is today often just used as a swearword for anything some leftists dislike about capitalism. So, all discordant features of contemporary economic life – public-private partnerships, public-spending restraint, inequality and so on – are routinely attributed to ‘neoliberalism’, as if that label is sufficient to damn them.
When commentators try to go beyond neoliberalism as a mere pejorative, they tend to conceive of it as an Anglo-American phenomenon, with the Chicago School of economists, and Ronald Reagan and Margaret Thatcher, presented as its key protagonists. But the truth is somewhat different. Neoliberalism’s intellectual heritage is actually much more central European than it is American or British.
Carl Menger, the founder of the neoliberal Austrian School of economics, who died in 1921, was born in present-day Poland. And its two leading figures, both of whom came to prominence during the 20th century, were also from central and eastern Europe. Ludwig von Mises was Ukrainian, and Friedrich Hayek was born in Vienna. What these thinkers all shared was a set of unusual formative experiences: a proximity to and a greater personal awareness of the 1917 Russian Revolution and, later, of Stalinism and Nazi fascism.
Moreover, neoliberalism was never really simply an economic doctrine. Rather, it was much more a political project.
It emerged, then, partly from a critique of the spread of national sovereignty coming out of the post-First World War dissolution of the empires. Alongside the demise of the German and Russian empires, the Ottoman and Austro-Hungarian empires also came to their end. Many new nation states, politically nascent several decades prior, emerged in their stead. The thinkers, who later called themselves neoliberals, were hostile to this development. They saw national sovereignty as an impediment to the ‘universal economic freedoms’ they championed. Their favoured alternative to the nation was some mix of ‘world government’ with ‘individual consumer sovereignty’.
For example, many who were involved in setting up the famous neoliberal Mont Pelerin Society in 1947, not least von Mises and Hayek, had grown up destined to serve the now deceased Austro-Hungarian empire. They were unhappy with its dissolution, and came to promote the old empire alongside another failed institution, the interwar League of Nations, as being good models for international federation. Such cross-border organisations, they believed, could help bring about economic unity across countries and secure the benefits from a wider division of labour.
By the 1930s, neoliberals were among the most clearsighted in favouring supranational state intervention to preserve and secure the private-property-based capitalist order. Towards the end of the Second World War, von Mises suggested reforming the League of Nations as an international government. He hoped it might ensure the free movement of goods, services, capital and people, thereby anticipating by half a century the European Union‘s Single Market ‘four freedoms’ rulebook. Von Mises undoubtedly believed in the ‘invisible hand’ of the market. But he also thought it needed, to borrow an evocative phrase from Harvard historian Quinn Slobodian, ‘an iron glove’ of a supranational state to give it protection (1).
Most neoliberals, including von Mises, Hayek and Robbins, accepted that the nation state was not just going to disappear. Instead they proposed a form of ‘double government’: there would be both national and supranational states. What they called ‘cultural’ issues could still be managed at the national level, but the running of the economy would be separated from the nation and pursued at a world level. This ‘double government’ system was seen as a way to institutionalise their ultimate aim: the separation of politics from economics.
Double government would detach the rule of nation states from the rule of capital and private property. This represented a division between what neoliberals called imperium (the rule of people) and dominium (the rule of things). They sought to depoliticise the economy permanently, freeing it from the interference of politics and people, and leaving it to be overseen by a non-political supranational state.
Neoliberal, early globalist ideas therefore also anticipated the subsequent depoliticisation of economic policy that has become so evident in recent decades. Indeed, since the 1980s, especially across Western countries, authority and policymaking has been outsourced to unaccountable bodies such as independent central banks and, most blatantly, to the EU. National politicians across Europe have deferred power, responsibility and, sometimes, convenient blame to the Brussels apparatus. Accountability for policy at home can be evaded when it is claimed ‘EU rules’ preclude doing what people want or need.
It was neoliberals’ experience of the interwar years that stoked their outright hostility to mass democracy
On the one hand, neoliberalism’s interwar ideas fully appeared to anticipate the postwar economic framework of the IMF, the International Bank for Reconstruction and Development (IBRD) – subsequently renamed the World Bank – the General Agreement on Tariffs and Trade (GATT), and, later, the European Community (which became the EU). On the other hand, when these institutions were actually set up, many neoliberals thought they were flawed, on the grounds that they still ceded too much economic power to nation states.
However, this intellectual reaction did not stop neoliberals becoming active in the new regime. The German version of neoliberalism, which in 1950 was renamed Ordoliberalismus, was probably the most explicit in spelling out the state’s necessary responsibilities. Before the war, Ordoliberalismus’s founder Walter Eucken, from the Freiburg School, called for a ‘strong state’ to be able to stand above the interests of lobbies. According to Werner Bonefeld, a political scientist, this form of neoliberalism conceived the relationship between market and state as that between a free economy and a strong state.
In this spirit Lars Feld, the current director of the Walter Eucken Institute (set up in the mid-1950s following Eucken’s death in 1950), describes ‘classic neoliberalism’ as the government providing a rules-based, constitutional and legal framework to shape markets. Giving some cover for espousing a ‘free market’, he cautioned that government should not intervene in day-to-day economic decisions.
Feld describes the state as the ‘concentrated force’ of the system of liberty. Bonefeld therefore suggests that Ordoliberalismus is best characterised as an authoritarian liberalism, which has since been realised in the form of the EU (2). Postwar globalist Jan Tumlir, a lawyer and chief economist at GATT for nearly two decades from 1967 until 1985, also conceived of the EU in neoliberal terms. As he put it in 1983, ‘the protection of the private economy from the government was the eminent idea in forming the European enterprise’ (3).
Hayek pursued the same approach in arguing for global institutions to safeguard capitalism. For him, this meant protecting what he called the ‘negative right’ for foreign investments to have freedom from expropriation, and the right to move capital freely across borders.
Hence the welcome many neoliberals gave to the EU’s Economic and Monetary Union (EMU) and an independent European Central Bank (ECB). This amounted to an ‘economic constitution’ for Europe. In a similar vein, some neoliberals also support the controversial Investor-State Dispute Settlement provisions in recent mega-trade arrangements, which give businesses operating in foreign territories legal rights over the host nation state.
Drivers of the global order
The postwar realisation of the limited ‘double government’ idea established the coexistence of the nation state alongside a set of international bodies. The objective was for a more controlled world of states than the League of Nations had achieved. This aspiration was born of the harrowing experiences of the first half of the 20th century. While US global hegemony was a precondition for this postwar order, it is important to note that continental European figures were prominent in influencing the forms the order took. This reflected the fact that the harrowing experiences, to which the postwar order was a response, were felt most sharply in then German-occupied and wartorn central Europe.
There were three concerns motivating the architects of the postwar order. The first was a return of fascism, of international conflict, and ultimately of another world war. Second, they were worried about the collapse of the economic system, as had nearly occurred in the 1930s slump. And third, they were anxious about the power of the masses, of people taking matters in their own hands.
This last fear had been growing ever since the Russian Revolution. It was later reinforced by the conventional (though misleading) notion that Hitler and the Nazis had been elected democratically in 1933 (4). The fusion of these three concerns, which I will now look at in more detail, helps explain the globalists’ policies and behaviours throughout the postwar period.
1) Preventing conflict
The immediate worry for globalists concerned the resumption of international conflict. It is unsurprising that the terms globalism and global first began to gain intellectual currency soon after the outbreak of the Second World War (5).
The conflagration of 1939 marked the onset of the first truly global war. Up until then, the war of 1914-18 had usually been called the Great War. Although there was fighting in Asia and Africa, this earlier war had been predominantly fought on European soil. Some say the Great War only started being widely called a world war in 1939. Time magazine is reputed to have coined the term ‘World War I’ in its issue of 12 June 1939. From this new sense, and threat, of global warfare, minds soon turned to the need for a global plan for the peacetime order.
This was when the globalists first emphasised the global at the expense of the national. Rosenboim describes how a transnational network of globalist thinkers emanated from the traumas of war. The brutal consequences of the actions taken by sovereign Germany and Japan seemed to overwhelm any earlier appreciation of the benefits of national sovereignty. Fritz Scharpf, the former director of Max Planck Institute for the Study of Societies, wrote that after 1945 political authority on a nation-state scale seemed to lose much of its claim to ‘optimality’ (6).
Scharpf was in good company. Internationalists of various political creeds decried ‘self-interested’ sovereign states as the cause of war, and questioned the effectiveness of the national state as a standalone political unit. Since a federation of democratic nations had been necessary to defeat fascism, a similar sort of collective seemed an appropriate vision for a durable postwar order. It was also clear that simply reintroducing a loose League of Nations-type grouping would not be sufficient to preserve peace. So, instinctively, they took the technocratic route of adopting rules and institutional systems to try to cement international cooperation.
Hence the priority the new globalists gave in 1944, even as the bloodbath continued in Europe and Asia, to the Bretton Woods international monetary system for regulating currency rates, and setting up the IMF and the World Bank. These international arrangements were forged to prevent a recurrence of the chaotic interwar conditions. The UN was launched in San Francisco in June 1945. A year later in Geneva, Lord Cecil, who had addressed the first assembly of the League of Nations in 1920, declared: ‘The League is dead. Long live the United Nations.’ The GATT launched a year after that, in 1947.
The creation of GATT embodied the preferred, and conciliatory, postwar narrative about what had caused the conflict. This emphasised economic rather than political causes, blaming the war on an escalation that began with the use of discriminatory trade policies, primarily through tariffs. As a result, the first article of GATT committed its members to non-discrimination. Known as the ‘most favoured nation’ principle, trade concessions granted to one member were to be applied immediately and without conditions to all other members. Adherence to this provision would therefore prohibit the sort of discriminatory trade policies that had been pursued in the 1930s and had seemingly led to inter-imperialist rivalry.
The top-down anti-democratic approach of globalists was well illustrated at an agenda-setting US conference in 1958 on Africa’s development needs – there was not one African present
Similar sentiments were to the fore of the UN’s founding charter, in which members had come together to ‘save succeeding generations from the scourge of war’. Collective problem-solving sounded very attractive to leaders who, twice in their lifetimes, had seen fighting bring ‘untold sorrow to mankind’ (7).
However, this appeal to the responsibilities of member states meant that some mid-century globalists were openly disappointed that the UN charter continued to embrace national state sovereignty. Intellectuals, from HG Wells and Barbara Wootton to Hayek himself, expressed misgivings about the establishment of an international organisation that depended upon and reinforced the sovereignty of its member states. But, in truth, this dependence was a result of the decisive role the nation-state apparatus played in collectively prosecuting and winning the war. A fact that tempered the idea of completely curtailing the nation state’s role now that the war was over.
In fact, the organised planning that underpinned the success of the Allied war effort had impressed even right-wing thinkers. However, they argued that in the new global political space that had developed, the nation was simply too limited to be effective on its own. Hence they called for some form of international organisation, while retaining a role for the refashioned nation state. In the end, most globalists went along with constructing a new order around the extant nation states, limiting their powers without abolishing them.
2) Containing the capitalist crisis
The second motivating concern behind the postwar order was the fear of capitalist breakdown. The slump of the 1930s shook Hayek and his Austrian School colleagues just as severely as it did John Maynard Keynes and his fellow mainstream thinkers. Hayek and Keynes simply took different routes to save capitalism. Significantly, though, the paths taken were not that different, as illustrated at the famous Walter Lippmann Colloquium in Paris in 1938.
This was where von Mises, Hayek and others in attendance chose the label for their ideas of ‘neoliberalism’. Walter Lippman, an influential American journalist who had earlier been research director for President Woodrow Wilson’s Great War board, provided a personal link to the coming international order.
Proceedings at the Colloquium incorporated the same thinking that Keynes did in rejecting 19th-century laissez faire ideas. Their objective was not primarily to limit the state, but to rethink the type of state necessary for safeguarding the market from collapse. Many at the Colloquium recognised that the self-regulating market was a myth, and they knew from bitter experience that self-correcting capitalism did not work. The economy therefore needed support from the state. Endorsing an economic role for the state beyond that of the metaphorical ‘night watchman’ was part of neoliberal thinking right from its inception.
Today’s narrative fiction that globalist neoliberalism is ‘anti-state’ could selectively draw upon proceedings at the Colloquium. Some participants strongly critiqued what was called the ‘illusion of control’. While neoliberals wanted the state to preserve capitalism, they vehemently rejected state-socialist proposals for the ‘overhead control’ of the economy by ‘intelligent authority’. They repudiated such ideas as both naive and damaging. Instead, the neoliberals saw the economy as driven by millions of individual responses to prices. It was far too complex for any economist, or any central authority, to capture, comprehend and therefore control.
We should note this emphasis on ‘complexity’ even before 1939, as the theme is prominent in today’s globalisation theories. The prewar discussion undercuts those contemporary globalists who claim that complexity is a relatively new arrival, resulting from our globalised, fast-moving world, and, as such, it necessitates rethinking democracy because this form of governance was only feasible in the simpler times before the 1980s. Yet, as we see here, the idea of complexity has long been used to justify the limiting of democratic practices.
In the 1930s, the conclusion the neoliberals drew was that although the economy is too complex to be controlled, it could at least be ordered. This ordering would not just cement international cooperation, but also help curb the destabilising tendencies of capitalism and prevent capitalist breakdown. Hence the yearning for rules to encase capitalism. They argued that in order for the market to be able to exert its discipline, it needed to be protected by an ‘extra-economic framework’ in the form of a legal, constitutional, regulatory structure.
After 1945, the USA’s greatest economic success was leading the revival of international capitalism from the rubble of depression and war. The IMF and the IBRD began the process of restructuring capitalism in Western Europe and Japan. Under the additional pressures from the unfolding Cold War, the US went on to take direct responsibility for accelerating the rebuilding of Western capitalism.
While Hayek thought that ‘democracy needs the broom of strong governments’, he thought democracies could allow governments ‘too much power’
Japan was reconstructed under effective American occupation, led by General Douglas MacArthur. For European revival, the US took the lead with the Marshall Plan launched in 1947. As these interventions by the American nation state illustrate, international economic activities were not undertaken to the exclusion of the national state. Far from it. The international organisations and nation states worked in tandem. Decisions made at a supranational level relied upon national states for their implementation, individually or in collaboration.
This relationship between the state and international liberal capitalism is captured well by the term ‘embedded liberalism’. This was the phrase coined in the early 1980s by the political scientist John Ruggie to describe the international expression of the Keynesian mixed economy. Postwar national governments working within these international bodies were not discouraged from acting. On the contrary, they were required to act.
Indeed, they were expected to take much greater state responsibility for market stability and economic growth. For instance, nations that signed up to the Bretton Woods system committed to following the new multilateral rules of fixed but adjustable exchange rates. This was in addition to aiding their own economies through domestic state interventionism. Initially, the new international regime openly reconciled multilateralist economic initiatives with national state intervention (8). In contrast to the contemporary globalist belittling of the nation state, international and nation-state intervention were then not seen as opposites.
3) Controlling the masses
The third motivating concern behind globalism is a distrust of the masses. The political elites of Western Europe and America left the Second World War determined to avoid the unsettling social unrest of the interwar years. The almost immediate passage into Cold War ensured this anxious memory remained highly relevant. Concerns about class conflict were a heavy influence, not just on the extension of domestic welfare statism, but also for the establishment of the new international regime.
Globalists see ‘order’ of some type as required to contain the inherent unreliability and rancour within the populace. They interpret history as implying that ordinary people prefer authoritarian order and security to freedom and democracy. They conclude that it was the absence of international order in the interwar years that allowed the rise to power of Mussolini, Hitler, Franco and Stalin. Perhaps, wrote foreign-policy scholar Robert Kagan, if the US had done in 1919 what it did in 1945 – establishing a liberal world order – we might never have known the Hitler of our history books (9).
Neoliberal globalists like Hayek did not differ from Keynesians over levels of state intervention. Rather, their opposition came from associating Keynesian state policies with socialism and the unruly masses. They identified the postwar mixed economy as a variant of the state socialism they hated. Far from denying state activism in principle, neoliberals were much more concerned about the influence of Marxism and the Soviet Union, as well as the National Socialist fascism from which many of them had fled. It was their rejection of these forms of state control that reinforced their scepticism about democracy, and for some stoked their outright hostility to mass democracy.
American political theorist Wendy Brown suggested that the original neoliberals from the interwar years were not subjectively anti-democratic. But their emphasis on keeping politics separate from economics spread to keeping politics insulated from the ‘emotional demands of the uneducated masses’ (10).
As another account of the workings of political decision-making in postwar Europe explains:
‘Insulation from popular pressures and, more broadly, a deep distrust of popular sovereignty, underlay not just the beginnings of European integration, but the political reconstruction of Western Europe after 1945 in general… the “postwar constitutional settlement” was all about distancing European polities from ideals of parliamentary sovereignty and delegating power to unelected bodies, such as constitutional courts, or to the administrative state as such.’ (11)
A technocratic, anti-political approach to postwar international coordination suited the US agenda, too. Instead of a ‘league’ based on a presumed shared faith in civilised values held by people, the US emphasised the benefits of collective scientific and technical expertise. Building upon and expanding the work of the League of Nations’ apparatus of technical services, the Americans sought a permanent postwar rules-based machinery. This went far beyond security into areas of economic, welfare and social affairs.
At least in the Anglo-American discussions, the new organisations established retained an idealistic motivation of serving democracy. However, it was evident from the start that smaller nations, and the demos in general, would actually have little say in how they operated. All members of the UN were expected to obey decisions of the Security Council, which was dominated by the big five (the US, the UK, the Soviet Union, China and France). Under the UN’s Article 2, even non-members were expected to do the same.
At the same time, the use of the term ‘democracy’ often had a self-serving meaning for the dominant powers. According to the postwar British government, colonialism was justified as a ‘practical illustration of democracy under tuition’. Contrary to the notion that the new UN promoted universal self-determination, its charter avoided any clear commitment to full independence of colonies. Instead, the charter merely committed the colonial powers to promote ‘to the utmost’ the interests and wellbeing of the inhabitants of these colonies, now rebranded ‘non-self-governing territories’.
The US political elite, which talked of its ‘evolutionary’ approach to self-determination, also retained a highly qualified appreciation of democracy. In the 1950s President Eisenhower’s secretary of state, John Foster Dulles, explained that the US supported national political independence only when a country’s people had proven themselves ‘civilised’ enough. They needed to be ‘capable’ of sustaining independence and discharging national responsibilities in accordance with the ‘accepted standards of civilised nations’. What was ‘acceptable’ was defined by the US government at the time, not by the people in those countries.
This top-down anti-democratic approach was well illustrated at an agenda-setting US conference in 1958 on Africa’s development needs. There was not one African present. The organisers simply assumed that Africans would be poorly educated and likely to be partisan and narrow-minded, unlike the scientifically motivated Western experts attending.
Unearthed by Slobodian’s research, Tumlir was even more explicit in his anxieties about the masses. He said the international economic order was ‘protecting the world market’ from popular pressures. While still chief economist at GATT, he explained that whenever you have democracy, you also have the possibility that the masses can capture the state. The state then ‘ceases to be a government and becomes an arena for gladiatorial combats of organised interests’. A big risk with democracy, he concluded, is that it can lead to socialism (12).
The constitutional problem, Tumlir wrote, was that democratic governments could act against the vital interests of their own societies. Hence, a formal constitution is needed to ‘structure’ or ‘constrain’ political discussion. The World Bank has subsequently drawn attention to what it described as the ‘inherent dangers’ of greater openness and participation. Expanded opportunities for public participation are seen as increasing the demands made on the state. This, the Bank wrote, can increase the risk of gridlock or of state capture by vocal interest groups.
Tumlir laconically summed up the rationale for rules-based systems: ‘international rules protect the world market against governments’ (13). The rules as established by international elites apparently recognise the interests of a national society better than its own people can. Rules do not only put shackles on what governments can do — they also justify the refusal to engage in political debate with their people.
Globalists and neoliberals talk of ‘free market’ and ‘free trade’, but the freedom that really motivates them is the freedom from politics
The World Bank similarly drew attention to a role for international institutions as a mechanism for making external commitments when national governments undertake internal, and potentially unpopular, changes. These outside commitments make it more difficult for governments to backtrack on domestic reforms in the face of popular opposition.
Rules and democracy therefore don’t mix well. Rules are used to back up the insistence that there is no alternative (TINA). There is no value in even discussing alternatives because we have rules to follow. Tumlir also explained that international rules could help save national politicians from internal pressures: ‘The international economic order [could act] as an additional means of entrenchment protecting national sovereignty against internal erosion.’ In this Orwellian formulation ‘protecting national sovereignty’ implies its opposite. It instead means protecting the national political establishment from the wishes of a nation’s people.
With a more extensive institutionalised order, national politicians are able to defer to the interests of the world economy, or to ‘globalisation’, or to the EU or to the rules of the WTO to validate their actions or inactions. It is convenient for national leaders to have a supranational master to whom they can point their electorate, and shrug: ‘We had to do it, there wasn’t an alternative.’
For instance during the eurozone debt crisis in 2015, a majority of Greek voters rejected the terms of the bailout agreement drawn up in Brussels and Berlin. In response, the German finance minister Wolfgang Schaeuble succinctly summed up the globalist outlook: ‘Elections change nothing. There are rules.’
It is not coincidental that Hayek’s rejection of ‘minimal statism’ in Law, Legislation and Liberty came alongside a sustained critique of democracy. Specifically, Hayek criticised what he called the ‘unlimited, unrestrained’ representative democracy that led to stupid and damaging economic policies. This conclusion rested on his denial of the possibility of economic control, which led to another denial: people cannot be masters of their own fate.
Hayek was representative of neoliberal globalism when he determined that restricting political freedoms, including democratic rights, was sometimes necessary to preserve economic freedom. While Hayek thought that ‘democracy needs the broom of strong governments’, he thought democracies could allow governments ‘too much power’. This is why he explained he was always very careful to distinguish between ‘limited democracies’ and ‘unlimited democracies’. And his preference was for the limited variety.
This is why throughout his lifetime, and especially after 1945, Hayek and other neoliberal globalists put increasing faith in the law – both national and supranational. Hayek distinguished the positive role ‘law’ must play from the dangers of a ‘legislative state’. He therefore recoiled from the expansion of democracy around the world because it enabled the potential for economic intervention through legislation. This he saw as corrosive to the preferred separation of economics from politics.
It is now widely accepted, especially among Europeans, that supranational law can override national law within domestic courts. The high-profile operations of the EU’s European Court of Justice illustrate this. But this anti-democratic tendency does not mean globalists are always dismissive of the domestic courts. On the contrary, many recognise that domestic courts have the advantage over international ones of a greater semblance of legitimacy. In practice, domestic judges are also believed to be more reliable than democratic governments for enforcing international law. This indicates that for globalists the denigration of the political by the law assumes even greater importance than the promotion of the supranational per se.
This type of thinking confirms that the globalist scepticism towards the nation state is to a great extent driven by anxieties over its democratic content, rather than over its mass political aspects. Globalists fear the nation state only insofar as it is a mechanism for democratic power. The globalist denial of the effectiveness of national state policies is mostly a denial of the acceptance of democratic politics.
The globalist and neoliberal attack on nationalism and sovereignty is really an attack on the ‘unlimited’ power of the people, of which Hayek was so critical. Complementing their combined fears of a return of international conflict and of economic breakdown, what worries our globalist, often neoliberal elite most on a day-to-day level is popular democracy. They baulk at the notion of people intruding into their technocratic practices and procedures.
Motivated by those three concerns – international conflict, capitalist collapse, and the distrust of people – globalists are pragmatic, often fervent, about using state institutions to maintain and stabilise capitalist economic relations. The ‘liberal’ rules of the international financial regime were constructed more to build the capacity of international organisations, not to limit the interventions of individual governments. Globalists are happy running not just international institutions but national ones, too, as long as they can build in protection from democratic accountability.
Globalists and neoliberals will still today repeatedly recite their belief in the ‘free market’ and in ‘free trade’. But the freedom that really motivates them is not freedom from state intervention. It is freedom from the intrusion of politics. In the end this comes down to freedom from being answerable to the people. The triple goals of protecting capitalism from war, from breakdown, and from popular intrusion, and ultimately from popular insurrection, is what necessitates the globalist desire to curb the potentially disruptive effects on market processes of national democracy.
The synthesis of those three fears accounts for the anti-political core of neoliberal globalism. Slobodian appropriately describes neoliberalism as less a theory of the market, or of economics, than of law and the state. Neoliberal-informed globalism is much more a political project than it is an economic one. Hayek’s most important contribution to globalism was not his romantic attachment to the free market. It was his arguments about what he called the ‘dethronement of politics’. The irony is that the neoliberal goal of ‘depoliticising the economy’ is itself a political programme.
It ultimately finds expression in trying to shield capitalism from democratic influences. As early as 1932, Eucken, the father of German Ordoliberalismus, had openly denounced what he called the ‘democratisation of the world’, referring to the masses coming into politics through ‘universal’ (although, then, mostly male) suffrage. Almost exactly 50 years later, after visiting Pinochet’s Chile, Hayek was equally explicit about his contempt for democracy. In an interview with the Chilean newspaper, El Mercurio, he said he was ‘totally against dictatorships’ as long-term institutions, ‘but… at times it is necessary for a country to have, for a time, some form… of dictatorial power’. ‘Personally’, he continued, ‘I prefer a liberal dictator to democratic government lacking liberalism’ (14). This summed up the globalist philosophy that you cannot have political freedom without economic freedom, but economic freedom is okay without political freedom.
A quarter-century later, in 2015, Jean-Claude Juncker, president of the European Commission, expressed the same authoritarian message: ‘There can be no democratic choice against the European treaties.’ (15) This was no slip of the tongue. A few years earlier, when leading the Eurogroup of finance ministers, Juncker explained, ‘Monetary policy is a serious issue. We should discuss this in secret.’ He went on to acknowledge, ‘I’m ready to be insulted as being insufficiently democratic but I want to be serious… I am for secret, dark debates’. It is not such a long step from Hayek supporting General Pinochet’s Chilean dictatorship in the 1980s to the anti-democratic impulses of the EU bureaucracy in the 21st century.
Phil Mullan’s latest book, Creative Destruction: How to Start an Economic Renaissance, is published by Policy Press.
Phil will be discussing ‘What is neoliberalism?’ at the Leeds Salon on 23 May. Book your tickets here.
Picture by: Getty Images
(1) Globalists: The End of Empire and the Birth of Neoliberalism, by Quinn Slobodian, Harvard University Press, 2018, p111
(2) ‘Authoritarian Liberalism: From Schmitt via Ordoliberalism to the Euro’, by Werner Bonefeld, Critical Sociology, Vol 43, issue 4-5, July 2017
(3), ‘Strong and Weak Elements in the Concept of European Integration’, by Jan Tumlir, included in Reflections on a Troubled World Economy: Essays in Honour of Herbert Giersch, edited by Fritz Machlup, Gerhard Fels and Hubertus Muller-Groeling, St Martin’s Press, 1983, p36
(4) As Ian Kershaw’s Hitler, 1889-1936: Hubris shows, there were in fact specific anti-democratic circumstances leading up to the March 1933 elections.
(5) The Emergence of Globalism: Visions of World Order in Britain and the United States, 1939-1950, by Or Rosenboim, Princeton University Press, 2017
(6) ‘The joint-decision trap: Lessons from German federalism and European integration’, by Fritz Scharpf, Public Administration, Vol 66, no 3, 1988, p 240
(7) Preamble to the UN Charter
(8) ‘International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order’, by John Ruggie, International Organization, Vol 36, no 2, Spring, 1982, p393
(9) The Jungle Grows Back: America and Our Imperiled World, by Robert Kagan, Alfred A Knopf, 2018, pp144-5
(10) ‘Who is not a neoliberal today?’, by Wendy Brown, Tocqueville 21 interview, 18 January 2018
(11) ‘Beyond Militant Democracy’, by J-W Muller, New Left Review, 73, 2012
(12) Globalists: The End of Empire and the Birth of Neoliberalism, by Quinn Slobodian, Harvard University Press, 2018, pp 251-2
(13) ‘International Economic Order and Democratic Constitutionalism’, by Jan Tumlir, Ordo, 34, 1983, pp72, 77
(14) ‘Friedrich Hayek: An interview’, El Mercurio, 12 April 1981
(15) Translated from ‘Pas question de supprimer la dette Grecque’, Le Figaro, 28 January 2015
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