Globalists: The End of Empire and the Birth of Neoliberalism

"Yes, it’s a historical book about the origins of what people have come to call ‘neoliberalism’, which I find a somewhat irritating as it’s a very vague term. Often it’s used to mean all of economics, which is just absurd, as if the most conservative free-market economist was the same as someone like Paul Krugman. This book is about the philosophical origins of neoliberalism in 1930s Vienna and logical positivism and how it spread globally, particularly into Anglo-Saxon and American universities, and also about the way it underpinned the philosophy of globalization that we have seen take over the world since the 1980s. It’s really interesting to understand that the ideas that we think of as ‘natural’ actually have very specific historic and cultural origins. They spread through actual social networks and institutions. The book therefore also offers insight into how you can change that public philosophy. I don’t think neoliberalism has a universal definition. I’m much more persuaded by this account, which says, ‘there’s a historical school of thought that you can accurately call neoliberalism and here’s how it evolved.’ Obviously there is this idea of unfettered markets, which is an abstraction that doesn’t make any sense. I spent many years on the UK Competition Commission, whose aim is to make markets as competitive as possible. What you quickly learn is that every market has a particular set of institutional characteristics. They’re social institutions. Companies are social institutions. The idea that there is this magic free-market realm is an absurdity. The motivations and how it came to be so influential. The idea is that they were advocating globalization as a means of enabling companies to be unfettered by government policy within a particular nation. So the idea of globalization and its inevitability stopped national governments regulating and limiting the things that companies wanted to do. That’s the historical context in which he places it. “I don’t know whether you can have economic growth with a shrinking population” Because of the Depression, the demand for the government to intervene in the economy grew. You saw the New Deal in the United States and interventions elsewhere as governments responded to it. As a result, those who were on the side of big business became advocates of free movement of goods and capital globally, as a countervailing argument to government intervention at the national level."

"Slobodian shares Harvey’s conviction that neoliberalism must be understood as a global project, and, also, that states have a lot of work to do to establish markets and to elaborate codes of law designed to insulate private property and mechanisms of exchange from undue popular ‘interference’. But Slobodian’s focus is different from Harvey’s. He tracks neoliberalism back to its origins in 1920s and 1930s Vienna and, later, Geneva. Key economists involved in birthing neoliberalism—men such as Friedrich Hayek and Ludwig von Mises— were Viennese . Why was Vienna so important, as opposed to Berlin, Paris, or London to the elaboration of this doctrine? Slobodian’s answer has to do with the urgent desire of some who lived through the disintegration of the Austro-Hungarian empire to reproduce on a global scale what they regarded as their empire’s greatest achievement: the creation of a prosperous zone of free trade and market development across numerous lands, a political economic arrangement that, in their eyes, allowed the many peoples who inhabited those lands to maintain their own cultures and traditions. The Austro-Hungarian empire, in the view of Hayek and others, had built a free market economy that was itself robustly international and multicultural. “The question of how ordinary people voluntarily give their assent to an elite project is a critical one” Hayek and von Mises were among those who regarded the rise of socialism and communism in post-World War I Europe as abhorrent. They were scarcely more comforted by Woodrow Wilson’s principles of self-determination for all peoples. They viewed the new states emerging from a collapsing Austro-Hungarian empire as arousing too many raw emotions about national and ethnic pride. These self-determining nations, they believed, would soon be warring against other self-determining nations, and persecuting minorities in their midst. Hayek and von Mises did not trust democracy either, and worried that national legislatures elected by voters aflame with national pride and socialist aspirations would vote to break up the fortunes of the rich—and undermine capitalism—in the pursuit of an equality that could never be achieved. The ethnic and democratic passions of the masses had to be contained. One way to do that was to give the political economic underpinnings of the Austro-Hungarian empire a new life. Hayek wanted to bring into existence a world (as opposed to a mere region of central and eastern Europe) guided by an economically liberal constitution and international governing institutions to enforce it. These institutions, once established, would set the rules for free trade, protection of private property, enforcement of contracts, and capitalist development. These institutions would not literally supplant nations as units of governance; but they would constrain nations that had violated liberal rules of global economic exchange. Nations would find themselves encased in a world of free markets overseen by international institutions that possessed authority, on critical economic matters, greater than nations themselves. Yes. Slobodian tracks how ideas that had emerged in 1920s Vienna took concrete form in 1940s Geneva, where international institutions of the sort imagined by Hayek began to take root. Now, of course, Geneva would have counted for little had the US not emerged from World War II as a superpower, able to enforce a Pax Americana on the non-communist world. Switzerland could never serve as the cockpit for a reincarnated Austro-Hungarian empire were it not backed by American economic and political power. Bretton Woods, the International Monetary Fund, the World Bank, and GATT, all devised in 1940s, provided the blueprints for this new liberal international order. Slobodian argues that many of the key ideas for these blueprints originated with Viennese economists looking for ways to make the principles of a now ghostly Austro-Hungarian empire relevant to a post-WWII world. It’s quite a fascinating argument about how a set of imperial ideas survived the death of empire. This new international order had an imperial dimension redolent of what had once animated the Austro-Hungarian. It took the form of nations in the Global South that were formally independent but that were, in reality, subordinated to the national powerhouses (and the international institutions that served them) of the Global North. In Slobodian’s work, the 1970s was not simply a crisis of capital accumulation in the Global North, which had been Harvey’s focus. The crisis had also been precipitated by nations in the Global South attempting to alter the terms of trade, and more broadly, the imperial system of which they were a subordinate part. One sees this crisis emerging most immediately and clearly in regard to petroleum production in the Middle East, as in the 1970s instances when OPEC announced that its members would henceforth set production and price levels that suited their needs rather than those of the Global North. I think it’s more the latter. But keep in mind that the struggle between the Global North and Global South was shaped by the existence of a vast communist world that was deeply antagonistic to all forms of capitalist enterprise. The architects of a neoliberal world order often had to make concessions to countries in the Global South to keep them from shifting their allegiance to the Soviet Union and to China. As long as a communist world existed, and as long as it was determined to cut itself off from capitalist penetration, the neoliberal order imagined by Viennese and Genevan neoliberals could not become truly global. That is why neoliberalism could not triumph internationally until the 1990s, when the Soviet Union fell and China chose a capitalist road for itself. The rise and fall of communism, and its relation to neoliberalism, receives too little attention in Slobodian’s work."