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The End of Empire and the Birth of Neoliberalism

by quinn slobodian
harvard, 400 pages, $35

On April 15, 1994, in Marrakesh, ­Morocco, representatives of 124 countries signed an agreement ­effecting the greatest legal and institutional reform of the world economy in history. The Marrakesh Declaration gave birth nine months later to the World Trade Organization (WTO). No longer would international trade be governed by the changing fortunes of state power and political compromise, and no more would the world economy be simply a sum of separate national economic parts. In the words of the WTO’s second director-general, Renato ­Ruggiero, “We are no longer writing the rules of interaction among separate ­national economies. We are writing the constitution of a single global economy.”

Quinn Slobodian, a historian at Wellesley College, has written a new history of efforts made by European neoliberals over seventy-five years to create something like the WTO. ­Slobodian’s story begins in the ­chaotic 1920s aftermath of the collapse of the Habsburg Empire and culminates with the “crowning moment” of the creation of the WTO in 1995. The book is a grand arc of the fall and rise of world economic order. The WTO—and even more so the economic architecture of the European Union—is presented as the realization of a neoliberal dream.

Slobodian counters mistaken impressions of neoliberals as libertarians instinctively hostile to state power. In doing so, he largely elides well-known American neoliberals such as Milton Friedman and James M. Buchanan, and the Chicago School of economics barely makes an appearance. Instead, Slobodian works through the thought of what he labels the “Geneva School” of neoliberalism, an amalgamation of Austrian School economists, German ordoliberals, and economic and legal staffers from three Geneva-based international organizations: the League of Nations, the WTO’s predecessor General Agreement on Tariffs and Trade (GATT), and the WTO itself. He brings them all together as designers of a legal order that would create a single global economy and protect it from harm.

Slobodian emphasizes the importance of European neoliberalism’s Central European provenance. The collapse of the Austro-Hungarian Empire after World War I was particularly important in stimulating Vienna liberals to reevaluate their classical forebears and to design legal means of preserving economic openness in the face of socialism and ­nationalism. “Statecraft and law” end up being more important to this story than economics. One can see this in the intellectual path traveled by F. A. Hayek, who essentially departed economics for philosophy and social theory after his failed 1941 refutation of John Maynard Keynes in The Pure Theory of Capital. In fact, Slobodian urges his readers to consider European neoliberalism not as a theory of economics at all, but rather as a theory of social order.

While Globalists is first and foremost an intellectual history, ­Slobodian is not shy in demonstrating how neoliberalism supports corporate interests. In the 1930s and 1940s, there was a constant “intermingling” of neoliberal ideas with the material interests of the International Chamber of Commerce (ICC). Slobodian mentions that Ludwig von Mises earned his living working directly for the ICC as well as for the National Association of Manufacturers (NAM), and describes Austrian School and Mont Pelerin Society members Michael Heilperin and Philip Cortney as “the mouthpieces” of the ICC and the NAM during the battle over creating the International Trade Organization in the late 1940s. Despite their claimed opposition to all forms of concentrated power—not just states and labor unions but also business ­monopolies—Geneva School neoliberals relied on owners of industrial cartels for financial support.

Nonetheless, Slobodian insists that the Geneva School offers much more than crass ideological justification for the rule of capital. If forced to pick between neoliberalism as “a project to restore class power” and neoliberalism as “a coherent ideology” (I would say he means here “theory”), ­Slobodian chooses both. Yet the difference between an ideology and a theory is crucial for how seriously the reader should take Geneva School ideas on their own merits as ideas distinct (if not wholly separate) from the interests of capital.

Slobodian depicts European neoliberals above all as philosophers of order. The distinction between private and public is central to their thought. Following the (in)famous German jurist Carl Schmitt, European neoliberals interpret this distinction first and foremost as a legal one. Public law is “imperium,” the power and authority of the state over territory and rule over human beings, including the law that governs relations between legally distinct peoples. Private law, on the other hand, is “dominium,” the law of property ownership, civil society, and rule over things, the law that governs relations between ­individuals. Slobodian misinterprets Schmitt on this matter, however, and his misinterpretation has important ­implications for his depiction of ­Geneva School neoliberals’ understanding of politics.

For Schmitt, law is fundamentally a spatial order. The Eurocentric international order of the sixteenth through nineteenth centuries was a dual spatial order consisting of land and sea, a terrestrial space of state sovereignty and a maritime space of freedom. European jurists initially conceived of the sea as free in the Hobbesian sense, a lawless space where piracy flourished and order was impossible to establish. Through the expansion of British commercial and industrial power, however, the sea became a space of order. This was not accomplished through the extension of state sovereignty (­imperium) over the sea but instead through the growth of private law (dominium). In Schmitt’s telling, the nineteenth century saw the growth of an ordered world economy of free trade, free movement, and free competition. Like the sea, the world economy was a legal “space” of ­freedom.

Slobodian claims that Schmitt saw European legal dualism as “something negative, an impingement on the full exercise of national sovereignty.” This is a misreading. Schmitt actually believed that the dualism of land and sea is the foundation of the Europe-centered international order. In his view, that order’s demise was indeed “something negative.” Under British and especially American ­influence, international law began to be universalized. The states system was no longer politically and culturally homogenous and thus could no longer agree on and enforce a status quo. Without a spatial foundation for law, war was no longer bracketed. The demise of the Eurocentric international order unleashed total war in Europe not once but twice.

Slobodian instead casts neoliberals as the advocates of “balance” between imperium and dominium. By this he seems to mean that the neoliberal state is far from the “night watchman” model of nineteenth-century liberalism. It has many ­functions to fulfill. It cultivates domestic peace and dissuades revolution. It legitimates the free market. It enforces economic competition. It serves as a “market police” protecting the world economy. While this may be some sort of “balance” between state and market, the state ­desired by neoliberals is not sovereign but is subordinate to the needs of the world economy. Thus it is really Schmitt who is the truer ­proponent of balance between imperium and dominium, land and sea, state and economy. Neoliberals elevate dominium over imperium even to the point at which politics is eliminated and man himself is changed into a thing.

Politics is the great problem in neoliberal thought. In the neoliberal view, politics is dangerous because political actors seek to capture the state and use it to serve their special interests. (Hence the lamentations over rent-seeking and “state failure.”) While any organized group is theoretically eligible for condemnation as political, in Globalists neoliberals dump all their criticism on the laboring masses, the ­nationalist ideologies that animate them, and the machinery of democracy that enables them to exercise power. When ­Ludwig von Mises advocates for the “actual depoliticization of the economic” and Gottfried ­Haberler imagines an ideal economy that “bracketed the political,” Slobodian depicts them as trying to insulate the economy from the state. This misses the mark. What neoliberals really want is to insulate the state from its citizens.

What most distinguishes the Geneva School is its constant quest for a global fix to the neoliberal problem of politics. Neoliberals generally (although not universally) accept that the democratic nation-state cannot be eliminated. Therefore they must “defang” it. International institutions and law become just the set of pliers needed to extract politics from state decision-making. This is why Geneva School neoliberals nestle comfortably into international economic institutions like the League of Nations Economic and Financial Section, the GATT, the European Commission, and the WTO. International law substitutes for “arbitrary” exercises of state power responding to public pressure. The masses wield no power in world economy “beyond the border,” which is precisely why neoliberals choose to build their technocratic institutions there.

Yet for all their work designing international law and institutions, European neoliberals seem to have spent remarkably little time thinking about whether politics can be dissolved by the solvent of universal rules. When they think about this question at all, they tend to make one of three arguments. Most naive is the claim that states and interest groups will follow neoliberal rules out of enlightened self-interest. A second and more realistic answer is that global competition will force recalcitrant actors to follow neoliberal rules against their will. (Greece is a contemporary example.) Yet the persistence of socialists and nationalists resisting them and pursuing what neoliberals consider economic planning weakens this claim. A third and somewhat perverse suggestion is that neoliberals should mystify the world economy, its rules, and its institutions. In Slobodian’s words, “Hayek had made clear since the 1930s that two necessities for global capitalism were the invisibility and the anonymity of the world economy.” How precisely that would be accomplished is not something Slobodian’s subjects spent much time thinking about. The massive anti-WTO protests in Seattle in 1999 not only took globalists across the board by complete surprise but seem to have permanently derailed global trade negotiations. Only after Seattle did Geneva School thinkers begin to ponder fundamental political questions of authority and legitimacy.

Slobodian observes that prior to World War II, “nowhere was the global idea more at home than in the quaint town of Geneva.” This is more true today. This city of fewer than 200,000 inhabitants hosts thousands of intergovernmental meetings annually and is the headquarters of dozens of international governmental and nongovernmental organizations from the WTO to the World Council of Churches. Because of the legacy of the League of Nations, the ­United Nations maintains an especially significant presence there, including the World Health Organization, the ­International Labor Organization, and the United Nations Conference on Trade and Development. The U.N.’s human rights regime is also centered in Geneva. The world’s first modern international human rights treaty was signed in Geneva, and the subsequent train of international agreements regulating the conduct of war bears the city’s name. The headquarters of the Office of the United Nations High Commissioner for Refugees, the United Nations Human Rights Council, and the United Nations Office for the Coordination of Humanitarian Affairs are all there, each established alongside the International Committee of the Red Cross, Europe’s oldest and most significant humanitarian organization. While well outside the scope of Globalists, this global Geneva-based human rights regime shares many design features and philosophical commitments with the Geneva School, raising the question of whether European neoliberalism is really distinct from modern progressivism in its left-liberal forms.

Like the world economy, humanity is also encased in a global legal and institutional regime. Like neoliberals, human rights advocates press for a universal system of rules adjudicated through international courts. Like neoliberalism, human rights have a problem with politics, the laboring masses wielding power through democratic institutions, and are particular enemies of contemporary populism. Like neoliberalism, human rights do not seek the elimination of the state. Yet in order to realize the universality of humanity, the human rights regime subverts state sovereignty and seeks to scatter its remnants to free ­individuals. Imperium must go. No wonder then that neoliberals have turned in recent years to the language of human rights—“the right to trade” and the E.U.’s “four freedoms” of movement for capital, goods, services, and ­labor—to shore up the authority and legitimacy of globalist institutions. Both the transcendent world economy and transcendent humanity under a regime of rights have no need of pluralism and thus no need of politics.

Globalists ends with the failure of the great neoliberal project to “undo the demos.” Seattle is its beginning, and the more recent rise of anti-­globalist populism in the U.S. and U.K. is confirmation. Yet the global human rights regime indicates that this is not a strictly neoliberal goal. It is one common to all strands of liberalism. Both the world economy and humanity are liberal substitutes for the nation, while international trade and human rights law supplant national sovereignty and democracy. Against diverse ways of life and popular control over spatially limited social orders, liberalism seeks instead a universal regime of goods, services, and rights directed toward a fully individualized liberty. Liberalism promises we will be free from what it claims truly ails us—politics. In this way, Globalists helpfully proves the point Carl Schmitt made nearly a century ago: that there is “absolutely no liberal politics, only a liberal critique of politics.”

Darel E. Paul is professor of political science at Williams College.

Photo by Falcon Photography via Creative Commons. Image cropped. 

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