I’ve been promising a piece on Quinn Slobodian’s fantastic intellectual history of neo-liberalism in the international arena, Globalists: The End of Empire and the Birth of Neoliberalism. Here it is. The short version: if you have any interest in these topics, you should buy it. The long version is below the fold.
Slobodian’s book aims both to provide a crisp account of what neo-liberalism is, and to correct Polanyi. Many modern accounts of neo-liberalism begin, consciously or unconsciously, from a Polanyian understanding of the world. In The Great Transformation, Polanyi argues that the great upheavals of his age can in large part be attributed to `disembedded’ markets, which managed in turn to separate themselves from society, and to begin to devour it, replacing social bonds with atomized relations. This, in turn, gave rise to a counter-reaction from society – Polanyi’s famous ‘double movement,’ which had both malign and benign manifestations. This way of thinking is naturally attractive for people wanting to understand what is happening today in the way of globalization – both the turn towards more or less nasty forms of nationalist demagogy, and the possibilities of escaping both them and the all devouring market. For more on all of this, see here see here.
Slobodian thinks that this is mistaken. In his account, markets have not become disembedded from national societies and states so much as they have become re-embedded in international institutions. Neo-liberalism as manifested in the thought of Hayek and his European followers is the political project of looking to recreate state structures outside the grasp of democratic and non-democratic states. Far from thinking that markets are natural, neo-liberals accept that they are “products of the political construction of institutions to encase them.” (p.7) Instead of a double movement, we have a ‘double world’ of imperium, political rule exercised through nation states, and dominium, the world of economics and business, and a deliberate political effort to insulate the latter inside its own steel-hard casing against the depredations of the former. Neo-liberals then, look to an `interdependent’ world and a single global economy as a realm that should be held inviolate from national states, and the demands their people put upon them. This, as they came to realize over time, requires them to build their own quasi-constitutional structures at the international level, in order to fend off the persistent efforts of national states to shape and control competitive forces and economic flows that are better left alone.
Under this account, the most crucial dynamics of neo-liberalism did not involve the glamorous public clash of ideas between intellectuals. Instead, they were duller, more relentless and in the end, more effective – the persistent efforts of neo-liberals to argue through new kinds of international institution and to push back against organized efforts to make global markets more accountable to national authorities. Mont Pelerin was important – but so too were the International Chamber of Commerce and a multitude of boring seeming meetings and negotiations.
As Slobodian describes it (p.95), “[t]he realization of the 1930s for neoliberals was that the self-regulating market was a myth.” There was no international infrastructure of institutions to support international markets. Even worse, the twin pressures of national planning in the industrial economies and decolonization elsewhere threatened to subvert whatever autonomy international markets maintained. This led some neo-liberals to start dreaming of international federations that could mitigate the economic dangers of nationalism, and prevent national borders from blocking economic exchange. In the 1930s and the 1940s, Hayek was an advocate of world federation – he writes about it in the final chapters of The Road to Serfdom. Mises too proposed supranational federation, without any constraining “democratic world government.” The nation state was an adversary to be thwarted. “For [Mises], the real war was not between individual nations or empires but between the world economy and the nation as forms of human organization.” (p.109). Roepke argued that the “old formulas of parliamentary democracy have proven themselves useless. People must get used to the fact that there is also presidential, authoritarian, yes even – horribile dictum – dictatorial democracy.” (quoted p. 116).
These ideas were given practical weight after the war by neo-liberals who sought to bring them to the post-war arguments over how to craft an international trading order. Michael Angelo Heilperin played a key role in shaping debate through his role at the International Chamber of Commerce, pushing back against “economic nationalism” and efforts to aid the “transposition of democracy into international relations.” (p. 130). Instead, he advocated for a “militant globalism” that would trammel national sovereignty in favor of free global economic exchange. Philip Cortney looked to frame the interests of investors in free capital movement and protection from expropriation in terms of human rights rather than property. Their efforts saw long term success in the later development of modern bilateral investment treaties with their ISDS clauses. Neoliberals initially mostly deplored European integration because it worked against the dream of truly global markets represented by the GATT. However even though the Treaty of Rome was a compromise rather than a neo-liberal triumph, it pointed in hopeful directions for them. European Treaties, once the Court and the Commission began to press their logic properly, provided a compelling way of subordinating domestic regulations to a cross-national (though surely not global) market. A group of European constitutionalists, trained as lawyers rather than economists, saw the possibility for creating a truly international economic constitution that would underpin “undistorted competition.”
As Hayekians started to try to protect the GATT from developing countries’ efforts to reshape the global economic order, they started to frame a grander ambition of building a “rules-based system for the world economy.” (p.245). Just as Hayek had grounded his thought about markets in constitutional theory, lawyers at the GATT hoped to create the beginnings of a global constitutional order to restrain the ambitions of nation states and an “electoral takeover” by developing countries. This would further strengthen states against internal forces of populism. Binding rules would “protect” national sovereignty against “internal erosion,” by the paradoxical means of “subjection to the forces of the world market.” (p.250 – last quote Slobodian’s precis of the underlying logic of the argument). The intellectual seeds planted by these neo-liberals may have come to blossom in the WTO.
Slobodian’s book is excellent history. That it is blurbed by Bruce Caldwell as well as Angus Burgin and Mark Blyth suggests that his mirror is not a distorting one. While his own leftwing politics are not hidden, he is careful in sticking to the facts, and in trying to present the neoliberals’ own understanding of their project fairly, even as he also makes his own opposition to it perfectly clear. He has a big story, which does indeed shed important light on neoliberalism. If we think of it as a project of anti-democratic statebuilding at the international level, we come to see and understand many things that would otherwise be obscure. Many other people’s work makes better sense when considered through this lens, including, for example, Kathleen McNamara’s and Harold James’ accounts of European monetary union (James, who is no-one’s lefty, has a lot to say about the influence of Hayek on central bankers). Slobodian says, unusually for a historian, that much can be learned from political scientists, who have studied some of these questions with greater intensity than historians. I’ll return the compliment and note that the book ought to be assigned regularly on international relations syllabi. He exploits sources and synthesizes historical developments over decades in a way that political scientists stand to learn a lot from. It is an exciting book and deserves to do very well indeed.
That’s not to say that the book’s account is perfect or comprehensive. As noted, Slobodian is scrupulous in his use of sources, and in the conclusions he derives from them. Thus, for example, he notes that while neoliberal ideas went into the Treaty of Rome, he acknowledges that other and quite different ideas went in there too. Like any institution the EEC/EC/EI was a compromise. The WTO too is not, as he acknowledges, a simple product of the ideas of lawyers within it, even if these lawyers may have been quite influential. It was forged in negotiations between states, whose representatives likely had their own understandings of the world.
Put differently, the strength of the book and its limitations both run in the same direction. It offers a fresh and exciting new vantage point on an important set of global developments, drawing on important and under-utilized archival resources. It also implicitly pushes back at the romanticism of ideas that is core to the standard story of neo-liberalism. In this account, the less celebrated hewers of wood and drawers of water, who read and engaged with Hayek and Mont Pelerin, but had day jobs in international associations and institutions were quite as important as the Hayeks and Lippmanns of the world with their grand and airy plans for global federations and the like. By translating these ideas into practical politics, they made them important and relevant, embedding them in international discussions long before the much heralded ideological transformations of the 1980s.
Yet this perspective, however new and important, is radically incomplete if it is taken (as some less-careful readers might take it) as a complete history of globalization, and as evidence that international institutions represent in their totality some kind of grand neo-liberal plot. It would be better to say that they are in part the product of neo-liberal plotting – but also of the plots and plans of Keynesians, empire building bureaucrats, business lobbyists with narrowly defined interests and a myriad of other actors. Slobodian shows, comprehensively that one can’t understand neo-liberalism without understanding its focus on, and understanding of internationalism. One can use his evidence to build the beginnings of a case that one can’t understand internationalism without understanding the priorities and understandings of neo-liberalism. But it’s only the beginnings of that case – Slobodian’s work challenges other historians – and political scientists, economic sociologists and others – to begin to figure out how far it can be developed.
{ 57 comments }
Murali 05.03.18 at 9:05 pm
So, where does that leave you guys (i.e. the left)? If the right is filled with nationalists, and the (center?) with globalists, and the left opposes both, what is the left supposed to be about?
b9n10nt 05.03.18 at 10:45 pm
Murali @1: individuals and their communities, which higher levels of political organization are meant to serve and empower, rather than the reverse.
Raven Onthill 05.03.18 at 11:21 pm
Murali@1: A thing that doesn’t have a name yet or perhaps has too many names; a democratic international political and economic order.
I’ve been saying for years, in somewhat different words, that we will have either global democracy, global tyranny, or global collapse.
ph 05.04.18 at 12:18 am
“Yet this perspective, however new and important, is radically incomplete if it is taken (as some less-careful readers might take it) as a complete history of globalization, and as evidence that international institutions represent in their totality some kind of grand neo-liberal plot”
This seems thoroughly excellent, Henry. I expect/hope that Slobodian makes the limitations of this study clear to readers from the outset, presenting his work as a new stage in an ongoing and lengthy discussion. Yes?
Hugh 05.04.18 at 1:44 am
With the Double Movement, was Polanyi wrong, or talking about a development complementary to Slobodian’s? Must we be so binary about it?
Peter T 05.04.18 at 2:36 am
Polanyi is, I think, incomplete. It’s an old move to escape local constraints by buying into/constructing higher level institutions. Think of Scottish nobles bringing in London – all the privileges of a lord, none of the obligations of a laird, or Augustus making the world safe for oligarchy, or the Filipino notables who embraced Spanish and then US rule. That the market is the form of our time is because it’s our current ruling ideology.
The counter-movement is pressure first to escape and then to democratise the new level. This is aided by competition among elites, who find lower-level support essential in their contests. The escape from neo-liberalism might well be via China. Or it might be that environmental issues – which can only be managed locally – force a devolution.
Z 05.04.18 at 8:15 am
“Neoliberalism as a project of anti-democratic state building at the international level”
That’s a nice turn of phrase.
Murali 05.04.18 at 9:04 am
b910nt @2,
You’re fussing too much about the fact that you disagree with capitalist arrangements. The question is whether we should remain parochial in our outlook or more globalist. Neoliberalism has a story to tell about why we should have globe-level political organisations: So that we can trade with others (from a neoliberal perspective that’s a nice cooperative relationship. I’m not trying to convince you about the goodness of neoliberalism here). The question is what is the socialist picture here? It seems that even if every country was fully socialist (full democratic and public ownership of the means of production), there would still need to be global trade. And there would therefore still need to be organisations which ensured that people traded on an ongoing-peaceful basis and did not arbitrarily start trade wars. At the global level, I’m not seeing an alternative to neoliberalism.
Autarky just doesn’t seem like a viable option.
Raven @3,
So, just a different kind of globalism? I probably couldn’t convince you that neoliberalism is awesome (or probably the most awesome thing we could get in this imperfect world) but ultimately, if we’re talking about one global order or another, there is not going to be much in the way of local democratic control anyway.
Neville Morley 05.04.18 at 10:06 am
My usual historical pedantry, but “Augustus making the world safe for oligarchy†needs a lot of unpacking. At local level across the empire, yes, existing elites mostly consolidated their influence by siding with Rome, which had a vested interest in finding such collaborators and delegating most day-to-day administration to them – but that long predated Augustus. At the centre, Rome under the Principate looks rather more like contemporary Russia, where you can get very rich provided that you don’t show any hint of rivalling the emperor, than like a conventional oligarchy in which political as well as economic, military and social power is wielded by a small elite.
Jake Gibson 05.04.18 at 10:54 am
I am at point of hoping we can get the least bad dystopia possible. Neoliberalism may be the least bad we can hope for, but I am not willing to concede that yet. When I mention that the economy should serve the people rather than the reverse, the tesponse is usually that I am a Marxist or worse.
MisterMr 05.04.18 at 12:35 pm
@ Murali 3 & 8
My personal opinion is that this globalist/localist dicothomy is a false one: the right is filled by both globalists and neoprotectionists; I think that if we see things in a socialist perspective the point is that capital is globalist when it suits capital, and protectionist when it suits capital.
Also the nation state should not be idealised too much: most nation states aren’t really all that sovereign because they’re not powerful enough to be, and the ones that are powerful enough often trample on the sovereignity of others, so nation state democracy isn’t a complete democracy (yes, I’m an evil world government guy).
So in the end the left should be globalist in those situation where globalism is good for leftish purposes (e.g. a global tax on capital), and localist when localism is good for leftish purposes (e.g. trade pact that make it impossible for local unions to challenge businesses are bad).
Lee A. Arnold 05.04.18 at 1:25 pm
Karl Polanyi clearly stated that markets assume definite institutional supports. He surely would have recognized the growth of the “neoliberal international” order as another manifestation of that.
Polanyi’s focus was a different topic:
“A study of how empirical economies are instituted should start from the way in which the economy acquires unity and stability, that is the interdependence and recurrence of its parts. That is achieved through a combination of a very few patterns, which may be called forms of integration. Since they occur side by side on different levels and in different sectors of the economy it may often be impossible to select one of them as dominant so that they could be employed for a classification of empirical economies as a whole. Yet by differentiating between sectors and levels of the economy those forms offer a means of describing the economic process in comparatively simple terms, thereby introducing a measure of order into its endless variations.”
–From Polanyi, “The Economy as Instituted Process” in: Trade and Market in the Early Empires (1957), and reprinted in: Primitive, Archaic and Modern Economies (1968).
These “few patterns” are reciprocity, redistribution, and exchange — as he specially defined them, not necessarily as we currently think of them. The next paragraph of this essay is the essence of his contribution:
“Empirically, we find the main patterns to be reciprocity, redistribution, and exchange. Reciprocity denotes movement between correlative points of symmetrical groupings; redistribution designates appropriational movements toward a center and out of it again; exchange here refers to vice versa movements taking place as between “hands” under a market system. Reciprocity, then, assumes for a background symmetrically arranged groupings; redistribution is dependent upon the presence of some measure of centricity in the group; exchange in order to produce integration requires a system of price-making markets. It is apparent that the different patterns of integration assume definite institutional supports.”
For examples of reciprocity using symmetry, consider the bridewealth of cattle between the uncles of two Nuer clans during an interclan marriage which would be repeated in time by uncles throughout the tribe, or modern birthday gifting which eventually comes around to everybody (see the animation below).
For examples of redistribution using centricity, consider ancient temple economies, medieval fiefdoms, modern business firms, or modern government expenditure.
Examples of exchange in markets now abound of course. Note Polanyi’s last sentence in that quotation. It was apparent to him that price-making markets assume definite institutional supports.
Polanyi’s focus was NOT the exploration of the institutions themselves, as scholars and historians do now. He found a substratum of a very few simple forms that are endlessly inherent at different social levels and which are cloaked in institutions.
Thus “disembedding” is understood incorrectly by almost all of his readers, it seems. Polanyi did not mean that markets exist without institutional supports. He meant that the new total market system of the 19th Century diminished and disrupted the two other things alongside markets — reciprocity based on symmetry and redistribution based on centricity. These had determined almost all economic and social life for thousands of years.
Of course, from at least the time of the ancient empires there were also markets, external and internal, but these were not large enough to affect the lives of most people in those societies. Markets did not make a system, nor were they seen to make one. Markets were numerous and important by the 16th Century, but the big social change came by the 19th Century with the marketizing of labor and the attempts to rectify or unify the money system. This comprised the newly-intellectualized “self-regulating” market system, which included the premise to spread market exchange as far as possible.
Extended kinship systems (symmetry) and autarkic manorial systems (centricity) which had determined society began to dissolve at once.
Markets “disembedded” production and distribution from these older ways, but the intellectual brief of “self-regulation” did not mean, to Polanyi, that markets do not need institutional structure. He certainly wouldn’t have been ignorant of internationalization, he just didn’t study it so much. The latter part of his career appears to have been devoted to exploring the primitive and archaic societies in an attempt to regain what has been lost.
I think that there is no simple name yet for the central focus of Polanyi’s studies, i.e. the few substrata of all possible institutions. It has to do with the basic shapes in which intention may be formulated. In the introduction to The New Science (1725) Vico writes, “In my science, philosophy undertakes to examine philology. By philology, I mean the science of everything that depends of human volition: all histories of the languages, customs, and deeds of peoples in war and peace.” So maybe we could call it “philology” in honor of a definition that was prior to its restriction to linguistics. It might be interesting to see if reciprocity, redistribution and exchange can make the simplest description of what is going on inside sentences in Chomsky’s minimalist program.
Birthdays as reciprocity in symmetry (45 seconds):
Murali 05.04.18 at 1:27 pm
MisterMr @11
I thought part of the leftist objection to neoliberal institutions was that they tended to over-ride democratic preferences (at least nation-state level preferences*). A global democratic government would also over-ride local democratic preferences. MEP’s are either themselves democratically elected or selected by democratically elected governments. And the EU did impose austerity measures on Greece. A world wide democratic government would be even more right wing on lots of issues (esp LGBT rights).
*Which is an oddly specific unit of democratic preferences to care about.
b9n10nt 05.04.18 at 2:55 pm
Murali @ 8:
And there would therefore still need to be organisations which ensured that people traded on an ongoing-peaceful basis and did not arbitrarily start trade wars.
It seems like there’s a big difference between, on the one hand, allowing people and institutions to trade and, on the other hand, ensuring that they do and preventing them from prioritizing other goals. The former is likely voluntary, the latter is likely coercive.
I think we should start from the premise that empowering individuals and democratic, egalitarian communities to inter-politically coordinate and cooperate voluntarily will be sufficient for the general welfare.
Highly ideal, yes. But that is I think what you’re asking about: what are leftist ideals regarding international trade.
cervantes 05.04.18 at 3:19 pm
I don’t really see why this is somehow supposed to be a corrective to Polanyi. These developments largely came after The Great Transformation. There isn’t any contradiction.
Raven Onthill 05.04.18 at 6:13 pm
murali@8: “Workers of the world unite” is after all global.
Can you see any way – any way at all, short of blasting ourselves back to the stone age or wrecking the planet environmentally – that we do not get global peace without some sort of global political order? It doesn’t have to be a neoliberal order. I hope it is not. But unless we see the end of human civilization, the future is global.
Waiting for Godot 05.04.18 at 8:32 pm
@MisterMr 11
Whatchu said.
John Quiggin 05.05.18 at 2:44 am
@11 @17 Also what MisterMr said. The issues are being fought out at every level from individual workplaces to global institutions, and there’s no general rule about where neoliberalism is going to be stronger or weaker. Slobodian points to important cases where global institutions protect neoliberalism, but it’s easy to point to examples going the other way, like the OECD attempts to rein in profit-shifting.
Chet Murthy 05.05.18 at 11:40 pm
I’m not an economist or political scientist. A mere software engineer. It seems like one response to Murali would be:
Neoliberals define “globalism” to mean “global capitalism, unfettered by national priorities”. Per Raven Onthil, “a democratic international political and economic order” is also globalist.
One thing I really liked about this (Slobodian’s, Henry’s) way of looking at things, is that it -explains- the nastiness of what’s arising (arisen) in the Eurozone. The “rule-based economic policy-making” of the Eurozone is a pretty heavy bludgeon to beat down workers and the poor. But hey! It’s just technocratic rules — neutral and devoid of politics, right?
Rapier 05.06.18 at 1:31 am
Great swaths of neoliberal dogma are left out. The most important is Hayek’s most central idea. That is that markets are the perfect information processor. With the implicit and deceptive assumption that all markets are the same. Not to mention that markets can be corrupt.
Then too the international state building thing is a clever synthesis of a grand strategy but it misses easily seen and understood point that it is the neoliberal project to take over or infiltrate the state and then use states to create the markets the neoliberals think are needed. On a nation by nation basis or in the case of the EU a regional state like apparatus. Only then has the move to international state building via grand ‘trading’ schemes advanced.
Neoliberalism has nothing to do with laissez fair. It is the obverse of it. Not to eliminate the state from markets but to use the state to create markets. (Think ACA as one example)
My guru on things neoliberal is Phillip Mirowski.
https://www.youtube.com/watch?v=cf2YQ-1wvrc&list=PLQWdiYL5PMXHtFu6RpVfKyHftAmYlkxW7
Not that it will not all come a cropper because of nationalism.
MisterMr 05.06.18 at 5:53 am
@17 & 18
Yay!
@13
I cannot speak for other lefties, but I believe that “democratic economy” is a code word for “redistributive economy” that lefties use to make clear that we are no stalinists, however if a government democratically chooses policies that favor the rich on the poor we lefties are still against it so I personally think it’s a dubious and sometimes confusing expression.
In the case of Greece, for example, I think the EU policies were ultra wrong, but I’m not sure they were antidemocratic since Shauble too was part of a democratically elected government; this does not make said policies any smarter.
Chris Bertram 05.06.18 at 6:38 am
I did the Amazon word search thing to get an idea of what Slobodian has to say about my own pet interest, migration, and there didn’t seem to be a whole lot there and what there was suggested some neoliberal support for freer movement but quite a lot of concerns about places becoming too crowded, the wrong kind of people moving to places etc. The current order the that has been built is one of free movement for wealthy people whilst the comparatively poorer are locked behind national frontiers and unable to get access to the institutions and networks that could make them better off. I argue in my soon to appear book that we need a global system of rules, justified and justifiable to everyone, to govern migration. And that would certainly be a (welcome) restriction on the “sovereign power” of nation states. No idea what Slobodian himself thinks on this issue.
Raven Onthill 05.06.18 at 10:11 am
Chris Bertram@22: “Because goods are free to move but not people / Oil is free to move but not people / Jobs are free to move but not people / Money is free to move but not people!”
A neoliberal world order depends, in part, on keeping people from going where the jobs are, while allowing goods and capital to circulate freely. A hypothetical international socialist order might do just the reverse.
Gordon 05.06.18 at 1:40 pm
Relevant: “Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World” by Mitchell and Fazi.
As the interests of citizens are overridden by the interests of global economic forces, especially finance, right wing populism promises some protection for ordinary citizens while the left remains stuck in identity politics because–among other things and for various reasons–it doesn’t reject globalization. Thus we get Brexit and Trump. The authors contend that states have the ability to reject those choices and reclaim the ability to make economies work better for ordinary citizens.
This is just one of a number of recent books with similar messages.
LFC 05.06.18 at 1:57 pm
A couple of somewhat disconnected thoughts.
It’s been a longish time since I had to be in even cursory contact with the scholarly lit. on globalization and the state etc, but istm Slobodian might usefully be put into conv with some of the Gramscian work on IPE. Also, from a different direction, w O. Rosenboim’s The Emergence of Globalism, on post -WW2 visions/theories of world order.
Whether the ‘global market’ needs rule-based protection from national states, as the neolibs thought, depends partly on the configuration and relative strength of pol forces within the states themselves. From the neolib standpt, for example, the decline of labor union strength and density on a national level, roughly concurrent w rise of Reagan, Thatcher et al, meant that states would more likely be collaborators rather than adversaries, transmission belts (to borrow a phrase from someone, I forget who) rather than obstacles to neolib policies.
Chip Daniels 05.06.18 at 3:24 pm
As a layperson, I notice a disconnect in the argument for the current state of global trade.
One the one hand, it is asserted through trade treaties that we need a globalized system of laws and courts to facilitate trade, with a jurisdiction that supersedes national boundaries and sovereignty.
Yet when attempts are proposed to modify these laws and courts with for example, a global system of minimum wages and worker protection and environmental regulation, the cry goes up of” national sovereignty!” and the impossibly complex task of integrating these things with the myriad national laws and customs.
Lee A. Arnold 05.06.18 at 6:05 pm
People must be free. Yet most people who move, are compelled to move, to find a job or a life.
“Freedom of labor movement” began as the essence of the “commoditization of labor” that is necessary to the market system. It is disciplinary. It is a component of the claim to “self-regulating” market.
(Economists and academics regard it likely to move around for careers, and so perhaps discount it a bit.)
At the global level, capitalists might now seek advantage in nationalist attempts to restrict migration, in order to play one poor population against another, for cheaper labor. This is a contingent exploitation though it may create havoc. It is not a necessary theoretical premise of the market system; quite the reverse: the enclosure laws expelled and mobilized labor to commoditize it.
Globalization is brilliant in two ways: 1. it has brought poor people rapidly into economic development, while 2. the resulting disemployment in the advanced countries proves — in yet another way — that capitalism is successful in eliminating labor.
Those who work for a better world will lose the argument to fascist evil until they get a positive message that accounts for all of these developments. Calls for new policy ought to take advantage of where this whole system is necessarily going.
We should call for more trade, call for shorter work weeks, shorter patents, more progressive taxation, an end to tax havens, larger government monopsonies for necessary goods and services, guaranteed income, wilderness protection. Make it a neat and tidy list, it must cover future developments, it must be expressed as a whole.
Kindred Winecoff 05.06.18 at 9:50 pm
Great review, Henry. I had many of the same thoughts about the book — which I’ve not quite finished yet so my thoughts are very preliminary — and it made me revisit your TINA article in Aeon, which has held up depressingly well. (It also made me hope Blyth would write a review, since Slobodian’s main thrust seems not to be congruent with Blyth’s main thrust in some key ways.) Your last few paragraphs are really important, and it should make us ask whether it makes sense to think of the FDR/Truman admins as “neoliberal,” whether the “trente glorieuses” managerialist successes were built on neoliberal principles (and the effective segregation of the labor of the global south from northern markets), etc. This would be a very significant re-imagining of political economy for most on the left and many on the right too. I am sympathetic to it, but the implications of it are very serious.
It’s also worth asking whether different political projects were operating along parallel tracks, so lumping them all together as “neoliberalism” might be too reductive, as might be positing that everything “neoliberal” is definitionally anti-left by being anti-democratic. Or, perhaps, to note (as Slobodian sometimes does) that there is a reactionary strand of neoliberalism through which “laissez-faire” is a justification for private control, but also a progressive strand through which global technocratic regulatory institutions (via Anne-Marie Burley) stabilize the global economy so that national social democracy can emerge, consolidate, and stabilize.
These aren’t easy questions, which is why Murali@13’s comment is so important.
Chris@22 & Raven@23, you might want to have a look at Margaret Peters’ book *Trading Barriers,* which argues (in part), that trade and immigration are substitutes. The implication, of course, is that trade reductions may lead to a push for more open immigration, but the push for this will come from capital. Of course some democracies seem much more concerned about limiting migration than trade at the moment, and are being restrained from programs of mass deportation by the most non-democratic institutions of all: constitutional courts.
LFC 05.07.18 at 12:01 am
@Kindred W
Based on Henry’s review, which I might not have read w sufficient care, I’m not sure where you find the implication or suggestion that the trente glorieuses rested on neoliberal principles. I would have thought they rested more on what Bowles & Gintis called the Keynesian accommodation.
John Quiggin 05.07.18 at 12:41 am
@28 The set of poor countries at the beginning of the Trente Glorieuses included Japan and Southern Europe. The were followed by the Asian tigers from the 1960s onwards, and a larger set of SE Asian economies by the 1980s, and then China and India from the 1990s.
Import competition from newly industrialising countries has been a constant factor for developed countries throughout the post-1945 period, even though as the set of developed countries has expanded and the set of newly industrialising countries has been constantly replenished.
So, I’m not convinced that the Trente Glorieuses depended on the effective segregation of the labor of the global south (interpreted to mean then-poor countries) from northern (developed) markets.
Kindred Winecoff 05.07.18 at 1:36 am
LFC, the “Keynesian accommodation” was premised on the presence of multilateral international institutions that regulated and stabilized the global economy technocratically, i.e. the very institutions that Slobodian argues were part of the neoliberal effort to de-democratize political economy. Many American policymakers viewed these as an international extension of the domestic New Deal, and many Europeans viewed them as necessary to safeguard progressive goals against populist forces right and left. (Even worse: these multilateral institutions were explicitly biased against Southern labor — hence the immediate rise of dependencia and the popularity of various Marxian political projects during these years, particularly in the South… this makes them look more “neoliberal” given common usage of that term.)
Thus, if you buy Slobodian’s argument, and I think there’s a lot to say for it, then you almost have to conclude that people like FDR, and even Keynes himself, were either neoliberals themselves or were working alongside neoliberals, even if inadvertently. That’s because neoliberalism is *not* about laissez-faire in the Slobodian framework — that’s just old liberalism — but about protecting markets from the vagaries of democratic political systems that had just proven capable of producing fascism and socialism. There’s a lot of overlap between that political economy project and the projects of FDR, and Keynes, and many others.
If you stick to the old “embedded liberalism” argument then you can get back to the Polanyian story quite easily. But I think Slobodian is correct that that story isn’t quite right.
Henry put it like this in the text: “Yet this perspective, however new and important, is radically incomplete if it is taken (as some less-careful readers might take it) as a complete history of globalization, and as evidence that international institutions represent in their totality some kind of grand neo-liberal plot. It would be better to say that they are in part the product of neo-liberal plotting – but also of the plots and plans of Keynesians, empire building bureaucrats, business lobbyists with narrowly defined interests and a myriad of other actors.”
And earlier: “Neo-liberalism as manifested in the thought of Hayek and his European followers is the political project of looking to recreate state structures outside the grasp of democratic and non-democratic states.” Of course Hayek himself would be horrified by the modern EU, and many other international institutions too. Milton Friedman hated the exchange rate regime institutionalized in Bretton Woods. And that’s because the form and content of these institutions were (and are) contested, as Henry noted.
But it’s also why your Krugmans and DeLongs of the world are routinely called “neoliberal”: they believe (or used to believe, in PK’s case) in the Keynesian ideal of technocratic macroeconomic management and an open-but-regulated global economy, all of which is “undemocratic” in a very real sense.
Or, as Keynes put it to Hayek: they might disagree on degree but they agreed on kind: https://antidismal.blogspot.com/2013/08/keynes-on-road-to-serfdom.html
Kindred Winecoff 05.07.18 at 1:48 am
JQ@30, I should have more clearly stated that capital mobility restrictions aided labor in capital-rich places and harmed labor in capital-poor places. Japan and (part of) S Europe, tho damaged by the war, were nonetheless industrial economies. Most former colonies and commodities exporters not so much.
Even so, as soon as Japan, Germany, and the Tigers really started exporting the global economy became imbalanced (helped along by pro-cyclical US deficits), Bretton Woods fell apart, capital mobility increased, and the Northern trends of wage stagnation and rising income inequality set in almost immediately after. Possibly that’s a coincidence, but I’m not so sure, particularly as the first stages in this process were seen pretty clearly by Keynes and Triffin among others. It’s unclear whether there could have been a trente glorieuses of the form we had it without a lot of trapped capital. But, as dependency theorists noted at the time, that state of the world can do a lot of harm to capital-scarce economies.
Peter T 05.07.18 at 9:33 am
I think a useful text here is Adam Tooze’s 1916. He lays out there how US financial and political circles realised in that year that they had so much invested in an allied victory that they had to make one happen. They simultaneously realised that the leverage this would give them could be a source of immense and continuing profit. I don’t agree with all of Tooze’s arguments (in particular his belief that the US might have shaped events in Russia to produce a liberal rather than socialist revolution), but the main points to a conscious use of US power to shape pretty much all the institutions that emerged over succeeding decades. One interesting conclusion might be that the forms of neo-liberalism that came to the fore with Reagan reflect US decline.
MisterMr 05.07.18 at 11:05 am
Kindred Winecoff 32
I have some problems with your explanation.
“Even so, as soon as Japan, Germany, and the Tigers really started exporting the global economy became imbalanced (helped along by pro-cyclical US deficits), Bretton Woods fell apart, capital mobility increased, and the Northern trends of wage stagnation and rising income inequality set in almost immediately after.”
For what I know (based on Varoufakis’ book “the global minotaur”) more or less ut to the 70s the USA was a net exporter. V. calls this phase “the global plan” and explains that the USA used the “reconstruction” markets of Europe and Japan as a place where to sell american excessive production (that, implicitly, couldn’t be absorbed in the home market).
After the 70s we enter in the phase that V. calls the “global minotaur”, where the umbalances go in the other direction and the rest of the world basically vendor finance the USA deficits.
V. doesn’t really explain what causes this change, nor why one umbalance is ok while the other destroys Bretton Woods.
I don’t think that current world markets can be described as more umbalanced than the postwar world market, in fact the main point is that the world market, for whathever the reason, doesn’t really tend to equilibrium.
Furthermore, for countries that were net importers during the “global plan” period, there wasn’t a wage stagnation; when these countries became net exporters, the wage stagnation began for them too.
I’m not saying that there is no relationship between globalisation and the fall in the wage share in developed economies, but I think that the relationship is not as straightforward as is currently often assumed: globalisation coincided with the progressive dismantling of the welfare state, a wave of privatisations, rolling back of several worker’s protections, a swithch in macroeconomic policies from direct government investiment to indirect investiment and a shift from fiscal policy to interest rate policy, Volcker’s shock etc.
“Many American policymakers viewed these as an international extension of the domestic New Deal, and many Europeans viewed them as necessary to safeguard progressive goals against populist forces right and left. (Even worse: these multilateral institutions were explicitly biased against Southern labor — hence the immediate rise of dependencia and the popularity of various Marxian political projects during these years, particularly in the South… this makes them look more “neoliberal†given common usage of that term.) ”
Many europeans though viewed this international extension of the New Deal as a sort of mini-socialism, and some liked it for this reason, some hated it for this reason.
Hayek clearly hated the New Deal because he believed that it was hidden socialism.
The welfare state is known as “stato sociale” in italian, with a clear nod toward “socialism” (I think this is common in romance languages).
Of course New Deal capitalism and neoliberal capitalism are similar under many points of view: they are certainly more similar to each other than to, say, italian city states in the Renaissance, or the Soviets. But relative to the time period we are speaking about, they are the two extremes of policies, with New Deal being on the left and Neoliberalism being on the right.
In facts, I believe that what we call Neoliberalism should be better called anti-new-deal (or Old-Dealism?), and it’s quite pointless to search for a theoretical core in it because it’s just a reversion to the old rules. Even the recent neo protectionism is just a reversion to policies that were way more common and more extreme before WW 1, so I don’t think that the recent neo protectionism is really an opposition to neoliberalism, but more like another step down the same ladder.
Chris Bertram 05.07.18 at 11:22 am
@Kindred thanks for the Peters pointer. Interesting to see how isolated disciplinary literatures on the same topic (even within the social sciences) can be from one another.
LFC 05.07.18 at 11:24 am
@Kindred
Thanks, that’s helpful.
My only (at the moment) footnote wd be on first point re the multilateral institutions. I suspect Prebisch and those who agreed w him would have said that secularly declining terms of trade for the South preceded the postwar architecture, which reinforced, or did not reverse, a trend that was already in process. (I use the word “suspect” because am not positive about this.)
Z 05.07.18 at 12:12 pm
Murali @13 I thought part of the leftist objection to neoliberal institutions was that they tended to over-ride democratic preferences (at least nation-state level preferences*)*Which is an oddly specific unit of democratic preferences to care about.
It may be true descriptively that many leftish objections to neoliberal institutions take this form, but I don’t think there is anything odd going on prescriptively.
If the starting point is the idea that the left should be advocating democracy – broadly defined as the capability of an individual to participate in and influence the collective decisions the community he belongs to take – then the next step is to ask what are the pre-conditions for such a participation to obtain.
Depending on contingent social factors, it might be that at a given point in time and in a specific place, a certain nation-state satisfies some of these pre-conditions in certain respect, say with respect to educational policies for the sake of the exemple, whereas the regional area this state belongs to or the local areas that it comprises do not, while the local areas satisfy them better with respect to health policies. In that case, consistent left advocates will push for educational policies to be determined at the nation-state level and health policies at the local level. And if social circumstances change, then consistent left advocates will also change their positions accordingly.
Of course, the evaluation of the proper level should itself be conducted democratically, and of course in practice institutional inertia and self-reinforcing effects (a given policy creating the very field in which the discussion can be conducted for instance) make that evaluation potentially problematic. But the general principle seems relatively clear to me.
Back in the real world, there is really no hard case to judge. Many of the currently existing international institutions suffer from such a clear democratic deficit in Varoufakis’s sense (in the same sense that there is an oxygen deficit on the Moon), that left advocates should absolutely oppose their current shape, but that’s a reflection of currently prevailing contingent historical and social conditions, and so neither an essential property of them nor a consequence of them being international rather than national.
Kindred Winecoff 05.07.18 at 12:13 pm
MrMr@34, I disagree with Varoufakis on some things but I agree with him completely on this. To think through it you need to think of “imbalances” in accounting terms, referring to the national balance of payments. The end of Bretton Woods is thus linked to the switch from the US from a current account surplus economy to a current account deficit economy. And it was at that moment that capital mobility became freer, income inequality began rising, wage stagnation set in, and — in fits and starts — development of the non-Western core began in earnest. Possibly these things are not linked… I think they are. So does Varoufakis, implicitly. Since that time the US has become a “Global Minotaur”, to use his language, and it does have its perverse effects as he and others note. But none of that changes the fact that global development was very unlikely under the conditions of the trente glorieuses. And none of that is to say that global development cannot occur under conditions that are much more egalitarian than they presently are. I believe it can.
But by this view the unraveling of labor power in the US and elsewhere in the “Old Core” was less a cause of neoliberal globalization as a consequence, and a more-or-less inevitable one if development was to occur. This is why my argument with JQ above is pretty important.
CB@35, yes, I didn’t say you’d love it. It’s not really my style either. But she provides some pretty strong evidence, which you may assimilate as you will. I’ll just say that I view you as a strong ally of mine on your question and I thank you for your work on it, so I wouldn’t recommend it if I didn’t think it wouldn’t provide some help at some point or another.
LFC@36, see Helleiner’s *Forgotten Foundations of Bretton Woods* on this. No one could accuse him of being a neoliberal, in any sense, and he did quite a lot of work to establish the developmental priority that– at one stage, def not permanently — Prebisch thought he had extracted from the US. I reviewed the book here: https://drive.google.com/file/d/0BxJbtvATxBzpN0xZM1dxR05xaTA/view. I’m not particularly proud of that, reading it back, but word constraints made me cut out a lot and cram it all in. The gist is that it’s really worth reading if you want to know how this system developed and how it changed.
One bit from my review: “Thus, deviation from classical economic orthodoxy became embedded both in official U.S. policy and the Bretton Woods institutions from the beginning. Over time, the World Bank and IMF would develop a somewhat different reputation.” Worth thinking about in light of the discussion of the Slobodian view.
LFC 05.07.18 at 1:19 pm
p.s. with ‘South’ there meaning mostly ‘primary commodity exporters’
LFC 05.07.18 at 4:53 pm
Kindred @38
Thanks for link to your review. (Downloaded and will read.)
bruce wilder 05.07.18 at 6:09 pm
Murali @1, 13
For me, the “left” is defined by championing the dignity and material welfare of the subaltern, exploited and neglected classes against the (capitalist or aristocratic) bosses. “the poorest he that is in England has a life to live as the greatest he” expresses this spirit of democracy as the natural political right to participate in governance as an equal.
Human political economy at scale tends to hierarchical organization, in which the leadership elite may be tempted to trade-off the good of the whole society against the advantages available to their few selves from disadvantages visited upon the many. Pushing back against the predatory/parasitic instincts of the ruling classes is what the left does, whether in earnest calls for social reform or the altruistic punishments of riot and strike or the bottom-up organizing of community and cooperative or wielding the countervailing power of the state in economic regulation and constraint.
You asked, where is the left? In relation to neoliberalism triumphant, I think the honest answer is mystified, co-opted and absent.
Here is this semi-coherent political movement that has carried all before it in shaping the global economic order and we need scholarly tomes to explain what it is. Neoliberals have an effective rhetoric that lets them coordinate persistent policy development across complex international environments thru many years, but somehow remains obscure enough in its principles and aims that it requires elaborate descriptive narration. (Usually we have at least one commenter by now demanding to be shown that the label “neoliberal” isn’t devoid of meaning.)
The most famous neoliberal slogan is “there is no alternative” and certainly there is no left alternative . . . yet. What we have is more and more competitive storytelling, trying to come up with elaborate narratives that comprehensively take account of facts, and give deep meaning to the bumper sticker label-ideology “neoliberalism”. The hard part in such narratives, I think, is taking adequate account of the complex institutional mechanisms whose functioning and evolution under the pressure of strategic contests initiated by the players is being surveyed. A narrative tries to give meaning to the institution and its adaptive evolution without either doing too much violence to the actual detailed facts (including the facts of social/institutional mechanisms or getting bogged down in particulars of such details. The power of neoliberalism as an ideology is that it is itself a narrative in dialogue form between the right and left poles of neoliberalism, Thatcher and Blair, Friedman and (?) Brad De Long: it explains itself, criticises itself, provides thesis, antithesis and synthesis in succession without needing to leave the clubhouse and wins the argument simply by co-opting those who should be its opponents, inviting them into the argument and into the club (on neoliberal terms, using neoliberal terms).
I do not think “neoliberalism” reduces to a label without explanatory value, but I do recognize that it is challenging to distinguish the role of neoliberalism in the underlying evolution of political and economic institutions from the evolution itself. Neoliberalism, as its own narrative, makes use of that evolution to alienate agency where it is convenient: in the neoliberal telling, globalization, technology etc are inexorable impersonal forces while actual exercise of power (the Troika’s demands on Greece for privatization and labor law reform) and created mechanisms (e.g. investor state dispute) can be obscured or denied.
I think the natural thing for leftist impulses to do in response is to try to resurrect democratic control of the state as a source of countervailing power. What we are learning is that neoliberals anticipated that move. Maybe “anticipated” is the wrong word, because they experienced that use of the state and their first move in creating the neoliberal narrative was to erase that experience from popular consciousness as a new generation emerged into a world created by carefully balanced “institutional supports” for a market embedded in a mixed economy. The crisis when the liberal international order created during WWII ran out of road in the late 1960s was an inflection point in the evolution of the world economic system and the first in a series of opportunities to change the dominant narrative of political economy.
The vestigial left had abdicated its role in class struggle by the late 1960s and scarcely seemed to notice as the neoliberal right and its reactionary allies systematically undermined its institutional sources of support in the 1980s. The left lost interest in the mechanisms of political economy and the right, courtesy of the neoliberals had glib slogans and facile rhetoric to press “market solutions”. Floating exchange rates stands out in my mind as a prime example. It is a great story of a self-regulating Market solving an acute problem that the formal political system cannot seem to sort out by deliberation and negotiation and handing off to experts (and leads directly to handing off to negotiation and experts in a self-interested capitalist financial sector — hmmm).
So, now the left is going back over history to see where and when it all went wrong. Marx and Polanyi and Keynes are all moribund for this purpose, but people will try to find something they can use. Mirowski is good on the futility of this. I do not object myself; try what you can. Polanyi and Keynes made more sense to contemporary readers than they do on paper, because of the dialogue with acute experience of the readers at that time. Polanyi is a hot mess of Tudor enclosures and popular anthropology and rival clans building empires in Arabia. Keynes gets basic parameters wrong, sets himself impossible tasks and makes whole chapters unreadable. But, Polanyi had an ace: the role of adherence to the gold standard in screwing things up — that was a believable story in the 1930s for very good reasons. And, Keynes gave the economics profession a shorthand toolkit not for solving the problem of the Great Depression per se, but for wartime planning and setting up a (ordo) liberal regime for a post-war world, he was a great resource.
I guess if you think the Euro is the new gold standard and the EU is structured suspiciously like Bismarck’s North German Confederation / German Empire (without the titled nobility), Polanyi is a little useful. (I think those analogies are actually pretty good.) And, if you read Keynes as Minsky did, MMT suggests a path to restoring public control of money and instituting financial repression. (I am not a believer as far as MMT is concerned, but they have a better grasp of mechanism than neoclassical economics and that is something.)
TM 05.07.18 at 8:24 pm
MisterMr 34: “The welfare state is known as “stato sociale†in italian, with a clear nod toward “socialism†(I think this is common in romance languages).”
In German as well: Sozialstaat. That (Federal) Germany is a “social state” is even codified in the constitution. This however was hardly understood as a “nod toward socialism” (the constitutional text was even proposed by a conservative delegate, see https://de.wikipedia.org/wiki/Sozialstaatsprinzip) but it indicated a commitment to a mixed economic system which was seen (and at least until rcently touted as such) as superior to both Soviet socialism and unfettered American capitalism. Note (perhaps in a historical debate about neoliberalism this is relevant) that the foundations of the German welfare state were laid not at the time of FDR or Truman or LBJ but in the late 19th century under Bismarck.
TM 05.07.18 at 8:35 pm
Z 37: “If the starting point is the idea that the left should be advocating democracy – broadly defined as the capability of an individual to participate in and influence the collective decisions the community he belongs to take – then the next step is to ask what are the pre-conditions for such a participation to obtain. (…) In that case, consistent left advocates will push for educational policies to be determined at the nation-state level and health policies at the local level. And if social circumstances change, then consistent left advocates will also change their positions accordingly.”
This is an interesting concept but I don’t think that empirically, the left has a great track record in this respect. Are you aware of any specific examples?
TM 05.07.18 at 8:42 pm
CB 22: “The current order the that has been built is one of free movement for wealthy people whilst the comparatively poorer are locked behind national frontiers and unable to get access to the institutions and networks that could make them better off.”
Globally this is mostly true but within the EU at least, free movement is not a privilege of the wealthy. And while the right is keenly aware of this fact and accordingly hates free movement like the devil, the left tends to underappreciate its liberating effects.
MisterMr 05.08.18 at 9:29 am
@TM 42
“This however was hardly understood as a “nod toward socialism†(the constitutional text was even proposed by a conservative delegate, see https://de.wikipedia.org/wiki/Sozialstaatsprinzip) but it indicated a commitment to a mixed economic system which was seen (and at least until rcently touted as such) as superior to both Soviet socialism and unfettered American capitalism.”
Yes I understand that the social state is not the same thing as the socialist state, however my opinion is that this social state was an halfway solution to appease socialist-y demands from (part of) the population while mantaining an overall capitalist system. I think this is what happened under Bismarck (although my knowledge of Bismarck period is almost non existent so I might be wrong).
Even the use of socialist catchphrases was common to right leaners of the late 19th – early 20th century.
For example Mussolini used very often socialist sounding sentences (Italy had to enter WW2 because it was a “proletarian nation”) and also mantained that fascism was a third way between socialism and capitalism, however most of his policies were totally anti-socialist. For example the “proletarian nation” thing was based on the idea that Italy had to create its colonial empire to escape this “proletarian nation” situation, but socialists of the time believed that colonial empires were a consequence of capitalism and were to be avoided, so Mussolini used a socialist sounding catchphrase to do something that was directly against socialist doctrines of the time.
The reason for this is not that Mussolini or Bismarck were somehow less right leaning that american capitalists, but simply that in their times “socialism” was ascending and was a vote winner, so they had to manage it someway and “nodded” towards it even as they were fighting it (I think that Italian fascism can be understood as 90% anti-socialism, 10% other issues).
Currently however, since the fall of the USSR (and in the USA since much earlier) “socialism” is a vote loser (although it seems this is slowly changing), so for example americans call the “social state” “welfare state” because the term “social state” would poll worse, and it’s important to mantain that it has nothing to do with socialism.
But this is a matter of opposing rhetorics, if we think of “unfettered capitalism” on one side and “socialism” (somehow vaguely defined as a more egalitarian system) on the other, stuff like social/welfare state or social democracy are in the middle, so they can look as “socialism” or as “capitalism” depending on from what side we look at them.
Z 05.09.18 at 8:00 am
TM @43 This is an interesting concept but I don’t think that empirically, the left has a great track record in this respect. Are you aware of any specific examples?
As I wrote, my comment 37 was a prescriptive political analysis: what (I believe) coherent left advocates should do. Of course, the gulf between what (I believe) people should do and what actual mass social movements do is wide. That’s normal politically, and I don’t think it is such a big problem (it just means that at my minuscule scale, I should push in that direction the movements I take part in).
That being said, a growing part of the French left position on the European Union (especially after the election of Macron rearranged the French political system) seems to conform roughly to this prescription (I could add details, but I’m not sure they would be of any interest to you or anyone else). Am I wrong to believe that Die Linke is also on a comparable line?
TM 05.09.18 at 4:25 pm
@Z Perhaps you want to elaborate since I may be not fully up-to-date on the French left position on the European Union. My general impression is that both left and right like to claim “democratic deficits” when they don’t like the political outcome. When I don’t like what the EU is doing, I can always argue that this particular issue should be left to the nation state to decide. If I don’t like the nation state government, maybe the region or city should have more autonomy, because that’s more democratic, otoh when the state government enacts reactionary policies, maybe they should defer to the federal law instead. It’s not a particularly left problem but in my experience, there is little coherence in these positions.
Henry 05.09.18 at 4:33 pm
Chris:
Indeed, the book doesn’t have much to say on this though it does have quite a bit about the decline of empire and linkages between property rights and voting within states.
LFC:
Can’t remember if he cites to these people particularly, but he clearly is engaged with (and in conversation with) left IPE to a far greater extent than most historians.
Kindred:
I think that QS’s reply would be that he isn’t providing a complete genealogy of where these institutions came from, but one important strand of the debate that led up to them. Thus, he acknowledges that other concerns than neoliberalism animated the Treaty of Rome. I would guess that he would call for a lot more research to really understand how much of this era’s institutions and workings reflected neoliberalism, and how much other values and ideals.
F. Foundling 05.10.18 at 12:39 am
As I see it, the logic of 28 and 31 seems to be roughly the following. Some people tried to establish international institutions in order to prevent national states from conducting social-democratic policies. Other people tried to establish international institutions in order to make it possible for national states to conduct social-democratic policies. Next, the argument goes like this. 1. Since both groups participated in the establishment of international institutions, and the existence of any international institution inevitably take some discretion away from national states, we can consider them both to be ‘anti-democratic’; 2. Since both acted with technical economic theories in mind, we can consider them both to be ‘technocratic’ as opposed to ‘democratic’; 3. Therefore, we might as well treat both groups as one and the same and start calling them both ‘neoliberal’ and, by implication, treating them in a more similar way; instead of rejecting one and embracing the other, we should, presumably, learn to love both.
Apart from both (1) and (2) being obviously unwarranted (neither international institutions nor the use of technical knowledge preclude the principle of democratic decision-making), it is worth having different names for different things when they do, in practice, differ in their objectives and effects in a way that the language user considers important, so that he finds it desirable to treat them differently. And in this case the objectives and effects have, arguably, been dramatically different, so obliterating and forgetting the distinction seems like a rather undesirable move at least to me.
bruce wilder 05.10.18 at 1:42 am
Murali: Neoliberalism has a story to tell about why we should have globe-level political organisations: So that we can trade with others (from a neoliberal perspective that’s a nice cooperative relationship.
KW. . . whether the “trente glorieuses†managerialist successes were built on neoliberal principles (and the effective segregation of the labor of the global south from northern markets), etc. This would be a very significant re-imagining of political economy for most on the left and many on the right too.
TM: My general impression is that both left and right like to claim “democratic deficits†when they don’t like the political outcome.
MisterMRI don’t think that current world markets can be described as more umbalanced than the postwar world market, in fact the main point is that the world market, for whathever the reason, doesn’t really tend to equilibrium.
I chose the above remarks because, it seems subjectively to me, that they implicitly treat “neoliberalism” as primarily a matter of “values and ideals” competing against “other values and ideals” (taken from Henry @ 48).
That embodies a troubling presumption about the nature of neoliberalism as a rhetoric of persuasion and as a program of institution-building and management.
As both Henry and Kindred Winecoff have implied without trying to spell out details, there were design principles in the institutions set up at Bretton Woods and in the years immediately thereafter: not necessarily the design of an architect, but rather the compromised design of contentious and extensive committees at various places and levels. So, complicated. And, what survived after the compromises in principle were accepted was conditioned on what seem to work acceptably well in practice and impart a modicum of stability in operation for the time being, for those parties with some degree of power to speak or walk away.
The system of fixed exchange rates worked until it didn’t. And, it was clear from the beginning that the system initiated in 1944 could not, and therefore could not, work indefinitely. It depended on the U.S. position in the world, a position that was bound to erode and which even the U.S. wanted to erode (in an orderly way).
When that international monetary and trading system failed in crisis, when it could no longer adapt to a changing reality — a rising Japan and Germany, global limits on resources, a diminished American gold reserve, U.S. deficit spending on guns and butter, the American need for foreign (Saudi) oil — there really were not that many people offering “answers”. Ideally, the international monetary system needed a thorough, thoughtful redesign, a renovation or perhaps demolition and rebuilding. If a scholar was interested in the road-not-taken, it would be a challenging business to describe the fork in the road and the constraints that prevented people in power from responding thoughtfully (if that’s the right word for anything political).
Milton Friedman very famously observed,
And, of course, Friedman had an answer*: floating exchange rates. To me that it is the quintessential neoliberal solution: make a facile proposal to embed an idealized market in the midst of a state function, disabling the state’s discretion with rules, talk up “freedom” and hide the foreseeable consequences behind a curtain of abstraction and obfuscation.
No Friedmanite “solution” ever worked as more than a slogan: he was a great polemicist, but that’s about it. So, yes, working out the practical operational details in agencies and banks no doubt mattered in the end a great deal more than the fundamentally unworkable “principle” in terms of what actually happened and what the actual consequences of policy were. But, this, too, is characteristic of neoliberalism: the “principle” lives on as rhetoric, no matter the reality. Ask Brad De Long or any neoclassical economist (not a specialist in international trade) how floating exchange rates work, and in the right context, you can still get a story about how value of the currency rises (falls) making exports more expensive (cheaper) and imports cheaper (more expensive) balancing trade. Is that a fair description of the practical reality? I don’t think so, but having a false story be the standard story is another way to disable popular democracy. So win-win.
Political power shifted away from democratically controlled state structures, indeed away from the state and public politics itself to bankers, who would be re-cycling ballooning stocks of financial capital. The American state was conceding some of its power to be the international shock absorber. It was inevitable to a degree: the American hegemonic reserve was diminished as the Western Europe and Japan rose and commodities like oil were sought from remote locations. The inevitability indicates that an inflection point was passed in a cycle that could be traced back to 1944 (and I’m sure, much further), but it should not be used to assert a continuity where an important and consequential choice was made.
There’s a real value to looking back on the events 1968-1984 and recognizing that before and after belonged to very different political-economic regimes and in between political choices were made, that profoundly affected who controlled the state and how responsive the state could be to popular interests (at least the interests requiring a substantive allocation of resources). And, the change was consequential for values and ideals, because the choice was about the mechanism design of institutions that constrained subsequent political choice.
The new regime found mechanisms that imparted stability: deregulation of transportation and opening the markets for steel and autos, America as the Consumer of First Resort for Export-led Growth, the Great Moderation and the Greenspan Put, the manufacture of housing debt to be resold to China’s Yuan stabilizing machine, and so on. But, these mechanisms cannot go on forever, either. No mechanism can.
I like Henry’s review a lot and this is a book I will seek out when I have time, but I looked back over the comment thread, and though I very much appreciated Kindred Winecoff’s contributions, I felt “neoliberalism” diffusing away into a fog of “values and ideals” for the lack of clarity that core mechanisms were in dispute, and those disputes settled in accord with a pattern that somewhat justifies “neoliberal” as a label for something more profoundly consequential than “value and ideals”.
*Friedman had answers to lots of problems — I am just picking one from his portfolio.
engels 05.10.18 at 1:11 pm
Interesting essay on the EU’s ‘freedom of movement’
https://newleftreview.org/II/110/stathis-kouvelakis-borderland
LFC 05.10.18 at 3:52 pm
Note: This is a long comment; apologies.
First, while some of this is probably a matter of terminology, I think F Foundling @49 has a point, or at least has identified some of the key issues in dispute.
I’ve not yet v carefully read Kindred’s review of Helleiner, but here’s where I think I might differ somewhat in terms of emphasis. Kindred stresses in his comments here that the post-WW2 multilateral institutions and the regime they underpinned (incl. restrictions on global capital mobility) harmed labor in the global South and helped labor in the global North.
For example, Kindred @31:
I would suggest that the bias against labor in the global South predated the postwar int’l regime, which probably reinforced or formalized tendencies that already existed. I would further suggest that dependency theory in its various forms and permutations was not a direct reaction to the bias of the multilateral institutions vs Southern labor but an indictment of a situation that, again, preceded the establishment of the Bretton Woods institutions.
Raul Prebisch’s work at the Economic Commission on Latin America (as I believe it was called), which formed part of the intellectual underpinning for the South’s New Intl Economic Order program of the ’70s, emphasized that the exporters of ‘primary’ commodities (like bananas, coffee, minerals, and so on) from South to North got a raw deal because the prices of their exports were highly volatile and unusually dependent on fluctuations in demand etc., and the terms of trade (i.e., the prices of commodity exports vs. the prices of manufactured goods that these countries, at least those not heavily following an import-substitution strategy, needed to import) were biased in favor of the North. Hence the NIEO calls for, e.g., stabilizing the prices of commodity exports (in one way or another, via buffer stocks e.g.).
Now I don’t care whether you call Prebisch a dependency theorist (I don’t think I would, though there is an affinity w/ some aspects of dependency theory). My point is that the situation he was highlighting and criticizing preceded, I think, the Bretton Woods institutions. That Prebisch was involved with IBRD and/or IMF at their creation, as Helleiner’s book (according to Kindred’s review) emphasizes, is no doubt significant from the perspective of the story Helleiner wants to tell about the “forgotten foundations of Bretton Woods” — but btw is it really a “forgotten” fact that the World Bank and IMF originally had global development as one of their aims? (The World Bank today still does, for that matter; the IMF, not so much.) The question is where did it stand in relation to other aims, how was it carried out, how uneasily did it sit with, as Kindred says, the systematic bias against the interests of Southern labor etc.? (Presumably Helleiner goes into all that.)
Dependency theorists like Gunder Frank or later, perhaps in a somewhat different way, Cardoso and Faletto, emphasized the “distorted” character of the “development” in the South that occurred under global capitalist auspices (e.g., narrow elites in the South were helped and co-opted, the mass of the population was not; industrial and agricultural development was skewed in favor of production for Northern markets rather than home consumption; the export sectors were accordingly not integrated well w the rest of the economy, etc.). This, plus Prebisch’s work on trade, was an indictment of a whole system, of which the Bretton Woods institutions formed one part, but its target and focus was broader.
So while Kindred points to Bretton Woods as being biased against the interests of Southern labor, which it no doubt was, and vs the majority of Southern populations more generally, I would locate the fundamental sources of that bias more in the operation of the ‘world capitalist market’ itself in the relevant period. How much that operation was intimately bound up with the conditions that made possible the trente glorieuses (primarily a Northern phenomenon) is a question I’ll leave to others. But I do think the whole history here is in some ways more tangled and ambiguous than Kindred’s comments, well-informed though they are, indicate.
Chris Bertram 05.10.18 at 4:15 pm
@engels Not a great piece, just far too ideological. The stuff on the EU’s external border is mostly accurate, though there’s a lot of spin around Merkel and refugees (hardly surprising since the source is Streeck) and no discussion of Victor Orban’s key role in closing the Balkan route. But it then spins off into the usual Greece-as-victim/Tsipras-as-traitor diatribe.
Z 05.10.18 at 6:22 pm
My general impression is that both left and right like to claim “democratic deficits†when they don’t like the political outcome. When I don’t like what the EU is doing, I can always argue that this particular issue should be left to the nation state to decide. If I don’t like the nation state government, maybe the region or city should have more autonomy, because that’s more democratic, otoh when the state government enacts reactionary policies, maybe they should defer to the federal law instead.
This is indeed a common position (on every side of the political spectrum) but it has little to do with what I was talking about. The point is not to assess whether I agree with the policies decided at a given level, the point is to assess whether a given level satisfies the pre-conditions for genuinely democratic decisions to be taken (genuinely democratic here of course understood in a relative sense). I can for instance strongly disagree with the policies chosen by the town I currently live in while assessing that the pre-conditions for genuinely democratic debate and decision-making are absolutely satisfied in that particular case.
Whether or not a given polity satisfies (at a given point in time) the pre-conditions of genuine democratic decision-making is an assessment I believe coherent left advocates should always be making (and of course, when such pre-conditions are not judged to be met for a given level, I believe they should 1) strive for the social conditions to change in order to meet and/or 2) oppose the political decisions emanating from this level even those they might agree with with the exception of course of the one falling under provision 1)).
Kindred Winecoff 05.10.18 at 9:40 pm
Henry@48, yes I think you’re right about what QS would say. And your review clearly spells that out. But there’s something of a paradox here. QS links ideational neoliberals (the Austrians) to the construction of these international regimes outside the realm of government control. But of course the ideational neoliberals were not in power during the key moments of the construction of this system. They had more power during later revisions — creation of WTO, change of IMF into a crisis-fighting Washington Consensus expander, integration of post-communist economies into these institutions — but even then it is hard to characterize many of these developments as ideationally neoliberal. Milton Friedman, e.g., was an opponent of the creation of the euro. So we can define “neoliberal” by output, as QS seems to want to do, but then we’re in the weird position where a bunch of progressive liberals, social democrats, and even socialists are “neoliberal” — hence the title *Globalists*. As I say I’m sympathetic to this reading of the history, but one implication of it is that there can’t really be a left internationalism premised on more-or-less egalitarian principles. That possibility is defined away. And I’m less comfortable with that.
FF@49, not quite. What I’m saying is that in QS’s account #s 1 & 2 are functionally indistinct w/r/t the term “neoliberalism,” b/c “neoliberalism” is about what they shared in common — creation of technocratic international institutions to regulate global capitalism — not how they differed — variations in domestic policies. This is important because, of course, it wasn’t Hayek and Mises who created the international institutions… it was FDR and Keynes for the BW orgs, and an assortment of European social democrats for the EU.
BW@50, I don’t really disagree with anything that you say. I’d only note that your question w/r/t floating exchange rates — “Is that a fair description of the practical reality?” — is best answered by noting that most exchange rates are not actually floating, and many of the other things you mention — maintenance of dollar hegemony, imbalanced development, etc — are related to the fact that governments actively manage their exchange rates in pursuit of domestic developmental priorities. These aren’t always democratic priorities, of course. But they sometimes are and the system as presently constructed allows for more flexibility than the BW system did. All to say: the “Lucas paradox” is almost solely caused by governmental actions, the market action works more-or-less as Friedman expected.
LFC@52, no doubt the pre-BW world was biased against the South too… even more so, given the overt imperialism of the era in combination with heavy trade protectionism in agriculture even for non-colonies. My point was really that the particular constellation of BW priorities — no capital mobility (i.e. capital trapped in the North), domestic monetary flexibility, trade openness for manufactures but not agriculture under GATT — was particularly good for Northern labor and particularly bad for Southern labor, and that’s not surprising given the distribution of international power at the time and basic comparative political economy logics of domestic politics. That’s all. And one signal that that is true is that as soon as that system broke down we began observing two things: wage stagnation in the North + wage increases in the South, i.e. Milanovic’s “elephant graph”; increased membership, and bargaining power, developing economies in international institutions (the culmination of which is the deadlock in the Doha round). So dependency theory seems to have been wrong to say that development was impossible under global capitalism, but they were probably right to say that the particular institutional configuration of the BW era made development very difficult.
TM 05.11.18 at 8:27 am
54: I still would appreciate elaboration.
“the point is to assess whether a given level satisfies the pre-conditions for genuinely democratic decisions to be taken (genuinely democratic here of course understood in a relative sense)”
So you are referring to whether the institutions in question are sufficiently democratic? The question would be for example if the French political system is so structured that the decisions taken by the president are genuinely democratic? I’m curious what your answer is to that. But the way you pose the issue here seems different from your discussion at 43, where you asked what the correct political level is for certain kinds of decisions to be made. I may be misunderstanding your point though.
LFC 05.11.18 at 2:46 pm
Kindred W. @55
Thanks for reply.
It would be interesting to consider the position of, say, India under the current system of global capital mobility and generally low trade barriers (coupled with its own changes in domestic economic policies dating from the early ’90s). There have of course been significant benefits, but also a whole set of new and/or intensified problems. And as of several years ago at any rate, roughly a third of the population still lived on less than $1.25 per day. But this strays too much from the OP and thus would be a discussion for another occasion.
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