Quinn Slobodian, Globalists: The End of Empire and the Birth of Neoliberalism. Harvard University Press, 2018. Hbk $35, £25.95, €31.50.
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In 1907 the Lower Austrian Chamber of Commerce and Industry set up shop in a new building at Stubenring 8-10, at the eastern end of Vienna's Ringstrasse. For a quarter of a century from 1909 it would be the daily workplace of Ludwig von Mises, during which period he hosted a fortnightly seminar for devotees of untrammelled global trade and the ruthless repression of working class dissent (42-8). He was joined in the 1920s by Friedrich Hayek and Gottfried Haberler, and in the 1930s they decamped to Geneva, where they linked up with Wilhelm Röpke, Michael Heilperin and others - forming the nucleus of the 'Geneva School' of neoliberals which is the subject of this excellent monograph. In 1983, still in Geneva, a 'third generation' of the school, GATT employees Frieder Rossler and Ernst-Ulrich Petersmann, set up its Office of Legal Affairs and commenced the task of transforming that body from what they saw as a vehicle for agitation for the New International Economic Order and an interventionist welfare state on a global scale into a rules-based framework that would protect the rights of property from political interference. Symbolically enough, when the GATT moved six years earlier into the building, formerly occupied by the ILO, the new tenants had immediately covered over murals depicting workers around the world, with Pascal Lamy sniffily protesting that it was 'a bit as if you took over from immigrants in a social housing development'. A 'world economy of labour, bodies, toil, and leisure' was in the process of being replaced by one of price signals, rules, and "the reaffirmation of the rule of law in international trade" (241). The WTO, founded in 1995, was the result of this transformation. Ironically the ILO murals would be restored as part of a cynical process of rebranding after the WTO, as the visible face of the enforced world market, attracted mass protest in Seattle in 1999 (281).
These are framing moments in a lively and informative narrative that traces the development of 'ordoglobalism' - a specific variant of ordoliberalism that focused on the world economy as a whole, and sought to arrive at an 'economic constitution for the world' (11-12). Slobodian's method is a fairly conventional form of intellectual/institutional history that uses the biographies of Geneva School neoliberals as a way to 'weave through a discussion of a series of institutions that were designed to encase the global market from interference by national governments' (20) - and by the same token, from democracy. Lead roles are taken by the League of Nations, the International Chamber of Commerce and the European Economic Community, as well as the GATT/WTO itself, along with international investment law, competition law, and such general schemes as supranational federation and weighted franchise. But this is not a story of the triumph of these neoliberal ideas. It is 'a story, not of a victory, but of an ongoing struggle to determine which principles should govern the world economy, and, by extension, all of our lives' (26). Plonked incongruously in the middle of it is a chapter on neoliberal responses to apartheid South Africa, which documents Röpke's crude and appalling racism, but otherwise interrupts the flow, and is not considered further here. Overall, this is a fine book, with many nice touches I can't cover here (the discussion of Clive Morrison-Bell MP's physical model of tariff walls from 1926 being one), and it is in the lead so far for the What's Worth Reading Book of the Year.
Mises wholeheartedly embraced the prospect that if obstacles such as barriers to trade and the institutional power of organised labour were removed, one would see 'a tendency prevail over the entire earth toward equalisation of the rate of return on capital and of the wage of labour' (42), and as a consequence his policy prescriptions in the 1920s 'always had two sides: open to the world market, and make the internal adjustments necessary to compete internationally' (43). He endorsed the massacre of workers in 'Red Vienna' in 1927; and when the slump hit Austria in 1930, he advocated cuts to unemployment benefits and to health and accident insurance, on the grounds that the discipline of the world market had to be brought fully to bear on the Austrian proletariat. Haberler was equally unsentimental: "Inactive production facilities are not actually witnesses to the destruction of capital, of losses that must be calculated against the advantages of the division of labour; rather they are milestones of the economic progress produced by the international division of labour". As for his theory of comparative costs: 'He asked the question: "How can an economy that is more poorly equipped in almost every respect withstand the competition of an industry and agriculture working with better production conditions without protecting itself with extra-high tariffs?" The answer was simple: "The poor economy can compete with the rich when the wages and all other forms of income are correspondingly smaller"' (50-51). For the Geneva School, there was to be no escape from the discipline of the world economy, and there is a clear line of continuity on this principle all the way through to contemporary international investment law and the WTO.
As the Depression gathered pace, the Economics Section of the Geneva-based League of Nations turned its attention to the world economy 'as a totality in statistics'; hence the world economy 'came into being in the 1930s in Geneva on paper and in numbers through the efforts of economists to understand the causes of the Great Depression and seek remedies for it'. In this period, the core group of the future neoliberal movement 'were all involved with projects of either creating statistical portraits of the national and world economies or seeking to understand their cyclical rise and fall' (57). Neoliberalism as a positive programme was 'born out of projects of world observation, global statistics gathering, and international investigations of the business cycle' (57-8). But it emerged by rejecting them. While statist interventionists of various kinds hoped that greater knowledge of national economies and the global economy would enable better methods of control, fine tuning, or new directions, the Geneva-based neoliberals came to see the collection of data for such purposes as pernicious, as it encouraged the illusion that knowledge was sufficient to devise effective action. They turned instead to imagining the kind of framework that might protect economic exchanges from such ill-advised meddling. Slobodian recounts successive meetings in Geneva and at the Imperial Palace Hotel, Annecy, the latter funded by the Rockefeller Foundation and asked to consider whether the concept of the global economy was 'sufficiently real to warrant continuous study' (73). Röpke, recruited to head up a new programme of research, was diverted into a new line of thought, as were others, by Walter Lippman's Inquiry into the Principles of the Good Society, and the Colloqium that followed in Paris in 1938. While there were significant differences between Lippman and his interlocutors, and among the now self-styled 'neoliberals' themselves, the common core was a move away from the discipline of economics narrowly conceived: the neoliberals took from Lippman 'the necessity for common laws throughout the world economy' (81), but while Röpke (along with co-author Alexander Rüstow) turned his attention to 'the disintegration of the moral function of our system' and therefore to the 'extra-economic' needs of humanity that had to be met to stave off the development of antagonistic class consciousness (cf. Bonefeld), Hayek endorsed the unknowability of the world economy as a positive virtue, and turned to thinking about the constitutional framework necessary to preserve its mystery and enable its untrammelled operation. The vital areas for action, on this analysis, were law and statecraft, precisely aimed to preserve the market order.
In their search for a model of governance that would 'best encase and protect the space of the world economy' (92), Hayek and Mises both turned first to the idea of a supranational federation. The nemesis, then as now, was economic nationalism, and their weapon of choice was 'economic internationalism', in Heilperin's phrase: "a policy intended to prevent political boundaries from exercising any disturbing effect on economic relations between areas on the two sides of the frontier" (93). Such a policy - at present in play on the Irish/Northern Ireland border - could in principle be achieved by a supranational entity, world government, or 'double government': Hayek and Lionel Robbins, both by then at the LSE and of a mind with the influential if now largely forgotten Moritz Bonn (96-8), 'proposed large but loose federations within which the constituent nations would retain control over cultural policy but be bound to maintain free trade and free capital movement between nations' (95). Slobodian draws the moral arrestingly: 'It must always be a possibility that, as [Robbins] put it in 1934, the merchant might "close down his works in Lancashire to commence operations in Japan." Shared precarity could and should be the foundation of world unity' (102, emphasis mine). At the same time, he traces Hayek's ideas for international federation, spelled out fully in the final chapter of The Road to Serfdom (1944), to his understanding of the Hapsburg Empire into which he was born, as allowing nations their own cultural systems in a common economic framework; and he sees Mises' proposal for an Eastern Democratic Union, which he drafted in New York in 1940 and offered as the final chapter of Omnipotent Government (1944), as even more closely based upon it. In this union, local 'sovereignty' would be highly visible but purely ornamental, while the EDU itself would be unseen, and its agents remote and unapproachable: 'an invisible government of the economy first, and a visible government of neutered nations second' (112). Röpke, drawing more on the model of Switzerland, dreamed of a world-wide federal union in which erstwhile nations would become 'cantons' in which the pandering to special interests that had debilitated and perverted national states would no longer be possible. Hence the familiar conclusion: "A strong state - resistant to the pressures of democratic influence - would be necessary to safeguard the economic constitution of the world' (117). What emerged in the event, in the wake of the war, was 'a semblance of economic world government [that] left much to be desired from a neoliberal standpoint' (119). The IMF and the IBRD (World Bank) were seen as misguided in their flexibility over 'fixed' exchange rates and their failure to rule out the policy autonomy that would enable the welfare state, but the neoliberals reserved their greatest hatred for the proposed International Trade Organisation, once the developing states secured provision within its proposed charter for 'the right to deviate from the orthodox rules of free trade to protect nascent industries against foreign competition and to pursue domestic development and full employment' (126). The Mont Pèlerin Society itself was founded at this moment, and quickly turned its attention to the proposed ITO, acting through the medium of resuscitated International Chamber of Commerce. Michael Heilperin advised it, and later counselled the US Congress against endorsement of this 'charter of economic nationalism', seeing it off, along with Philip Cortney (an immigrant from Romania who had become president of French perfume company Coty), despite the support for it of the US State Department (128-33). Heilperin and Cortney opposed it not because it infringed the sovereignty of states (the US included), but because it did not infringe it enough. But as noted above, the GATT turned out to be no better in their eyes.
If the case of the proposed ITO is clear, that of the European Union is not - while some claim that the original EEC (1957) followed Hayek's blueprint, others disagree, making it 'one of the riddles of the twentieth century' (182). Slobodian resolves the riddle elegantly, identifying 'universalists' (Röpke, Haberler, Heilperin) who opposed it because it not only hampered progress towards an 'economic constitution' on a much wider scale, but also protected agriculture and extended trade preference to the African colonies of its members. A younger generation of 'constitutionalists' (Hans von der Groeben, Ernst-Joachim Mestmäcker, Erich Hoppmann), who did see the Treaty of Rome as a 'economic constitution', hoped it might be a basis for future models of multilevel governance. These neoliberal lawyers would draw more on Hayek's writings on constitutional design in the 1960s than on his supranational blueprint: 'In an irony', Slobodian summarises, 'the defining postwar project of the Geneva School neoliberalism germinated inside the very project of European integration that the older neoliberals condemned. In shifting the scale of the economic constitution from the nation to the supranational federation and later the world, the neoliberal constitutionalists seeded the field of international economic law that would emerge in the 1970s and helped theorise an integrated Europe as a model for global economic governance' (184). Clearly, the EEC could equally be seen as either a grouping of states behind a tariff wall, and hence protectionist, or as a 'double government' that could evolve towards a purer 'economic constitution', and hence neoliberal. Alfred Müller-Armack was pivotal in securing Erhard's acceptance of the project of European integration, and endorsement of 'undistorted competition' and the 'four freedoms' of goods, capital, services and labour (190), but again, Slobodian's judgement is measured; 'The treaty itself was a product of months of negotiation and compromise. Looked at from one angle, it appeared to be a neoliberal victory. The four freedoms were enshrined in the text alongside a commitment to undistorted competition. From another angle, the success was more mixed. There were no mechanisms to enforce the laws of competition regulating monopolies and cartels, and the provisions themselves bore the marks of significant compromise with the French negotiators' (191); in addition, the introduction of imperial preference and the Common Agricultural Policy of 1962 were clearly massive steps away from liberal, never mind neoliberal, principles. Slobodian traces the ensuing contradictions from the last-minute spat over bananas and the prolonged debate over Eurafrique/Eurafrika (193-8) through to the 1958 Haberler Report (198-202), subsequent developments in multilevel governance (202-10) and the issue of the economic constitution and the 'power to decide' (210-14). The context is all important here - the founding of the EEC came at a crucial moment of impending decolonisation, and at a time when the over-riding priority of the US, itself shamelessly committed to protect its agriculture from competition, was to secure 'an agreement between the French and West Germans, regardless of the shape it took' (196).
In this distinctive conjuncture, the GATT commissioned Haberler in 1957 to investigate the decline in commodity prices that had followed the ending of the Korean War, signalling the persistence of agricultural protection in developed countries as "perhaps the biggest problem of all" (198). The ensuing report, from a balanced team that reflected both liberal and moderate interventionist positions, condemned the EEC and the US for their protectionism, and as a result won support from developing countries, phrased in liberal terms. Here, at least, Slobodian comments, countries of the Global South endorsed liberal principles rather than having them thrust upon them; neoliberal or not, Haberler was on good ground when remarking elsewhere that though Europe itself might profit, "the world economy as a whole loses" (203). Meanwhile, the 'second-generation' neoliberals Hans von der Groeben (in the European Commission for Competition) and Ernst-Joachim Mestmäcker (special adviser to the Commission) drew on Hayek's efforts in the 1960s to highlight and develop constitutional means to protect economic order from rent-seeking and particularistic capture to push European 'multilevel' government in a neoliberal direction by developing competition policy and enshrining private rights over national law (209): 'The vertical legal relationship created from the individual to the European Court of Justice created an avenue to elude deviant exercises of national sovereignty and secure the human right to trade" (210); for Mestmäcker, the Treaty of Rome as a self-executing constitution and the European Court of Justice as its guardian provided 'a model of supranational governance that had not only liberal principles at its core but a mechanism of enforcement capable of evading contamination by democratic claims-making' (214). The conclusion to this chapter (214-7) offers a neat and thought-provoking reflection on the 'Janus face' of European integration.
If the EEC was a monstrous hybrid that featured an emergent economic constitution behind a protectionist wall, the GATT was a permissive framework for the development of free trade with few powers of enforcement, subject to political control via the mechanism of one country, one vote. Against the background of the wave of Third World national developmentalism of the 1970s, reflected in numerous expropriation of US firms and the demand for a New International Economic Order, neoliberals turned to schemes for investment protection and third party arbitration beyond the reach of national states, in part as noted above via the reform of the GATT itself. Rossler and Petersmann, recruited, tutored and backed by Jan Tumlir, head of the GATT's research division from 1967 until his death in 1985, followed Hayek in developing an approach to multilevel regulation and constitutionalism that Slobodian calls 'cybernetic legalism': a self-regulating system whose rules are transformed into binding legislation to create a framework within which the "free efforts of millions of individuals" [Hayek] in response to price stimuli or signals produce an unknowable and ever-shifting order (223-4). In this line of thinking, individuals were steered by the demands of the international division of labour, and '[w]hen functioning properly, the world market itself was the helmsman of human actors' (233). After setting out Hayek's thinking at length (224-40), and concluding with his call for a 'thin layer of deliberate design' to be laid over the unconscious and relatively constant instinctive rules of physiology and the unconscious and acquired rules of tradition (238), Slobodian argues that these 'animating ideas' largely informed the WTO, for all that the road to it was 'a twisting one of diplomacy, political economy and power politics', and therefore identifies it as 'the last episode of the twentieth-century neoliberal search for an institutional fix in a world they saw as always threatened by spasms of democracy and the destructive belief that global rules could be remade to bend toward social justice' (257-8).
Mises saw it as the "fundamental social law" of capitalism "to draw the greatest number of human beings into the personal division of labour and the whole earth's surface into the geographical division of labour" through the "reign of competition" (107); Hayek's lengthy and elaborate 'philosophical' or better theological (268-9) explorations were geared solely to justify encompassing legal frameworks that would subject all of humanity to this law. In this prescription, as noted above, states were to be open to the world market, making the internal adjustments necessary to compete internationally; and it was clear from the start that the consequence would be a tendency prevailing over the entire earth toward equalisation of the rate of return on capital and of the wage of labour. As Hayek well understood, this did not mean that the world market was a realm of human freedom. Rather it was one in which prices (the impersonal signals of the market) told people what to do.
To state the obvious, then, a narrative that sees neoliberalism as originating in the 1970s and in retreat since 2007-8 entirely fails to grasp either the secular development of the world market, or the depth and strength of the neoliberal institutions and routines devised to protect and encase it. Slobodian addresses only some of them, but the great strength of his account, conveyed in vivid detail, is to highlight the importance of 'rules set by supranational bodies operating beyond the reach of any electorate' and the 'fundamental depoliticisation of the economic domain' (264-5). In the conclusion, though, he pinpoints a fundamental contradiction, illustrated by the world-wide protests against the WTO: any institution that becomes the visible embodiment of world market discipline will inevitably become a focus of political contention. 'It may be,' Slobodian comments, 'that Geneva School neoliberals were so busy building crystalline fortresses for the world economy that they failed to heed Mises's advice about reinforcing a mass mentality that would favour global rather than national markets as an absolute good rather than a pragmatic good to be favoured or rejected as fortunes changed' (285). This suggests that the building of supranational institutions would need to be supported by more insidious means of working directly on mentality and behaviour - a line taken up not only by Petersmann (2002) in his cynical, crudely transparent and instrumental attempt to codify the rights of capital as human rights, but also by Thaler and Sunstein (2008), and indeed the World Bank (2014; and Cammack, 2014).
References
Cammack, Paul (2014), 'The World Development Report 2015:Programming the Poor', Working Paper 7, The Multilateral Banks and the Global Financial Crisis, December (https://manchester.academia.edu/PaulCammack/world-bank).
Petersmann, Ernst-Ulrich (2002), 'Time for a United Nations "Global Compact" for Integrating Human Rights into the Law of Worldwide Organizations: Lessons from European Integration', European Journal of International Law, 13, 3, 621-650.
Thaler, Richard and Cass Sunstein (2008), Nudge, Yale University Press, New Haven.
World Bank (2014), World Development Report 2015: Mind, Society and Behavior, World Bank, Washington DC.
These are framing moments in a lively and informative narrative that traces the development of 'ordoglobalism' - a specific variant of ordoliberalism that focused on the world economy as a whole, and sought to arrive at an 'economic constitution for the world' (11-12). Slobodian's method is a fairly conventional form of intellectual/institutional history that uses the biographies of Geneva School neoliberals as a way to 'weave through a discussion of a series of institutions that were designed to encase the global market from interference by national governments' (20) - and by the same token, from democracy. Lead roles are taken by the League of Nations, the International Chamber of Commerce and the European Economic Community, as well as the GATT/WTO itself, along with international investment law, competition law, and such general schemes as supranational federation and weighted franchise. But this is not a story of the triumph of these neoliberal ideas. It is 'a story, not of a victory, but of an ongoing struggle to determine which principles should govern the world economy, and, by extension, all of our lives' (26). Plonked incongruously in the middle of it is a chapter on neoliberal responses to apartheid South Africa, which documents Röpke's crude and appalling racism, but otherwise interrupts the flow, and is not considered further here. Overall, this is a fine book, with many nice touches I can't cover here (the discussion of Clive Morrison-Bell MP's physical model of tariff walls from 1926 being one), and it is in the lead so far for the What's Worth Reading Book of the Year.
Mises wholeheartedly embraced the prospect that if obstacles such as barriers to trade and the institutional power of organised labour were removed, one would see 'a tendency prevail over the entire earth toward equalisation of the rate of return on capital and of the wage of labour' (42), and as a consequence his policy prescriptions in the 1920s 'always had two sides: open to the world market, and make the internal adjustments necessary to compete internationally' (43). He endorsed the massacre of workers in 'Red Vienna' in 1927; and when the slump hit Austria in 1930, he advocated cuts to unemployment benefits and to health and accident insurance, on the grounds that the discipline of the world market had to be brought fully to bear on the Austrian proletariat. Haberler was equally unsentimental: "Inactive production facilities are not actually witnesses to the destruction of capital, of losses that must be calculated against the advantages of the division of labour; rather they are milestones of the economic progress produced by the international division of labour". As for his theory of comparative costs: 'He asked the question: "How can an economy that is more poorly equipped in almost every respect withstand the competition of an industry and agriculture working with better production conditions without protecting itself with extra-high tariffs?" The answer was simple: "The poor economy can compete with the rich when the wages and all other forms of income are correspondingly smaller"' (50-51). For the Geneva School, there was to be no escape from the discipline of the world economy, and there is a clear line of continuity on this principle all the way through to contemporary international investment law and the WTO.
As the Depression gathered pace, the Economics Section of the Geneva-based League of Nations turned its attention to the world economy 'as a totality in statistics'; hence the world economy 'came into being in the 1930s in Geneva on paper and in numbers through the efforts of economists to understand the causes of the Great Depression and seek remedies for it'. In this period, the core group of the future neoliberal movement 'were all involved with projects of either creating statistical portraits of the national and world economies or seeking to understand their cyclical rise and fall' (57). Neoliberalism as a positive programme was 'born out of projects of world observation, global statistics gathering, and international investigations of the business cycle' (57-8). But it emerged by rejecting them. While statist interventionists of various kinds hoped that greater knowledge of national economies and the global economy would enable better methods of control, fine tuning, or new directions, the Geneva-based neoliberals came to see the collection of data for such purposes as pernicious, as it encouraged the illusion that knowledge was sufficient to devise effective action. They turned instead to imagining the kind of framework that might protect economic exchanges from such ill-advised meddling. Slobodian recounts successive meetings in Geneva and at the Imperial Palace Hotel, Annecy, the latter funded by the Rockefeller Foundation and asked to consider whether the concept of the global economy was 'sufficiently real to warrant continuous study' (73). Röpke, recruited to head up a new programme of research, was diverted into a new line of thought, as were others, by Walter Lippman's Inquiry into the Principles of the Good Society, and the Colloqium that followed in Paris in 1938. While there were significant differences between Lippman and his interlocutors, and among the now self-styled 'neoliberals' themselves, the common core was a move away from the discipline of economics narrowly conceived: the neoliberals took from Lippman 'the necessity for common laws throughout the world economy' (81), but while Röpke (along with co-author Alexander Rüstow) turned his attention to 'the disintegration of the moral function of our system' and therefore to the 'extra-economic' needs of humanity that had to be met to stave off the development of antagonistic class consciousness (cf. Bonefeld), Hayek endorsed the unknowability of the world economy as a positive virtue, and turned to thinking about the constitutional framework necessary to preserve its mystery and enable its untrammelled operation. The vital areas for action, on this analysis, were law and statecraft, precisely aimed to preserve the market order.
In their search for a model of governance that would 'best encase and protect the space of the world economy' (92), Hayek and Mises both turned first to the idea of a supranational federation. The nemesis, then as now, was economic nationalism, and their weapon of choice was 'economic internationalism', in Heilperin's phrase: "a policy intended to prevent political boundaries from exercising any disturbing effect on economic relations between areas on the two sides of the frontier" (93). Such a policy - at present in play on the Irish/Northern Ireland border - could in principle be achieved by a supranational entity, world government, or 'double government': Hayek and Lionel Robbins, both by then at the LSE and of a mind with the influential if now largely forgotten Moritz Bonn (96-8), 'proposed large but loose federations within which the constituent nations would retain control over cultural policy but be bound to maintain free trade and free capital movement between nations' (95). Slobodian draws the moral arrestingly: 'It must always be a possibility that, as [Robbins] put it in 1934, the merchant might "close down his works in Lancashire to commence operations in Japan." Shared precarity could and should be the foundation of world unity' (102, emphasis mine). At the same time, he traces Hayek's ideas for international federation, spelled out fully in the final chapter of The Road to Serfdom (1944), to his understanding of the Hapsburg Empire into which he was born, as allowing nations their own cultural systems in a common economic framework; and he sees Mises' proposal for an Eastern Democratic Union, which he drafted in New York in 1940 and offered as the final chapter of Omnipotent Government (1944), as even more closely based upon it. In this union, local 'sovereignty' would be highly visible but purely ornamental, while the EDU itself would be unseen, and its agents remote and unapproachable: 'an invisible government of the economy first, and a visible government of neutered nations second' (112). Röpke, drawing more on the model of Switzerland, dreamed of a world-wide federal union in which erstwhile nations would become 'cantons' in which the pandering to special interests that had debilitated and perverted national states would no longer be possible. Hence the familiar conclusion: "A strong state - resistant to the pressures of democratic influence - would be necessary to safeguard the economic constitution of the world' (117). What emerged in the event, in the wake of the war, was 'a semblance of economic world government [that] left much to be desired from a neoliberal standpoint' (119). The IMF and the IBRD (World Bank) were seen as misguided in their flexibility over 'fixed' exchange rates and their failure to rule out the policy autonomy that would enable the welfare state, but the neoliberals reserved their greatest hatred for the proposed International Trade Organisation, once the developing states secured provision within its proposed charter for 'the right to deviate from the orthodox rules of free trade to protect nascent industries against foreign competition and to pursue domestic development and full employment' (126). The Mont Pèlerin Society itself was founded at this moment, and quickly turned its attention to the proposed ITO, acting through the medium of resuscitated International Chamber of Commerce. Michael Heilperin advised it, and later counselled the US Congress against endorsement of this 'charter of economic nationalism', seeing it off, along with Philip Cortney (an immigrant from Romania who had become president of French perfume company Coty), despite the support for it of the US State Department (128-33). Heilperin and Cortney opposed it not because it infringed the sovereignty of states (the US included), but because it did not infringe it enough. But as noted above, the GATT turned out to be no better in their eyes.
If the case of the proposed ITO is clear, that of the European Union is not - while some claim that the original EEC (1957) followed Hayek's blueprint, others disagree, making it 'one of the riddles of the twentieth century' (182). Slobodian resolves the riddle elegantly, identifying 'universalists' (Röpke, Haberler, Heilperin) who opposed it because it not only hampered progress towards an 'economic constitution' on a much wider scale, but also protected agriculture and extended trade preference to the African colonies of its members. A younger generation of 'constitutionalists' (Hans von der Groeben, Ernst-Joachim Mestmäcker, Erich Hoppmann), who did see the Treaty of Rome as a 'economic constitution', hoped it might be a basis for future models of multilevel governance. These neoliberal lawyers would draw more on Hayek's writings on constitutional design in the 1960s than on his supranational blueprint: 'In an irony', Slobodian summarises, 'the defining postwar project of the Geneva School neoliberalism germinated inside the very project of European integration that the older neoliberals condemned. In shifting the scale of the economic constitution from the nation to the supranational federation and later the world, the neoliberal constitutionalists seeded the field of international economic law that would emerge in the 1970s and helped theorise an integrated Europe as a model for global economic governance' (184). Clearly, the EEC could equally be seen as either a grouping of states behind a tariff wall, and hence protectionist, or as a 'double government' that could evolve towards a purer 'economic constitution', and hence neoliberal. Alfred Müller-Armack was pivotal in securing Erhard's acceptance of the project of European integration, and endorsement of 'undistorted competition' and the 'four freedoms' of goods, capital, services and labour (190), but again, Slobodian's judgement is measured; 'The treaty itself was a product of months of negotiation and compromise. Looked at from one angle, it appeared to be a neoliberal victory. The four freedoms were enshrined in the text alongside a commitment to undistorted competition. From another angle, the success was more mixed. There were no mechanisms to enforce the laws of competition regulating monopolies and cartels, and the provisions themselves bore the marks of significant compromise with the French negotiators' (191); in addition, the introduction of imperial preference and the Common Agricultural Policy of 1962 were clearly massive steps away from liberal, never mind neoliberal, principles. Slobodian traces the ensuing contradictions from the last-minute spat over bananas and the prolonged debate over Eurafrique/Eurafrika (193-8) through to the 1958 Haberler Report (198-202), subsequent developments in multilevel governance (202-10) and the issue of the economic constitution and the 'power to decide' (210-14). The context is all important here - the founding of the EEC came at a crucial moment of impending decolonisation, and at a time when the over-riding priority of the US, itself shamelessly committed to protect its agriculture from competition, was to secure 'an agreement between the French and West Germans, regardless of the shape it took' (196).
In this distinctive conjuncture, the GATT commissioned Haberler in 1957 to investigate the decline in commodity prices that had followed the ending of the Korean War, signalling the persistence of agricultural protection in developed countries as "perhaps the biggest problem of all" (198). The ensuing report, from a balanced team that reflected both liberal and moderate interventionist positions, condemned the EEC and the US for their protectionism, and as a result won support from developing countries, phrased in liberal terms. Here, at least, Slobodian comments, countries of the Global South endorsed liberal principles rather than having them thrust upon them; neoliberal or not, Haberler was on good ground when remarking elsewhere that though Europe itself might profit, "the world economy as a whole loses" (203). Meanwhile, the 'second-generation' neoliberals Hans von der Groeben (in the European Commission for Competition) and Ernst-Joachim Mestmäcker (special adviser to the Commission) drew on Hayek's efforts in the 1960s to highlight and develop constitutional means to protect economic order from rent-seeking and particularistic capture to push European 'multilevel' government in a neoliberal direction by developing competition policy and enshrining private rights over national law (209): 'The vertical legal relationship created from the individual to the European Court of Justice created an avenue to elude deviant exercises of national sovereignty and secure the human right to trade" (210); for Mestmäcker, the Treaty of Rome as a self-executing constitution and the European Court of Justice as its guardian provided 'a model of supranational governance that had not only liberal principles at its core but a mechanism of enforcement capable of evading contamination by democratic claims-making' (214). The conclusion to this chapter (214-7) offers a neat and thought-provoking reflection on the 'Janus face' of European integration.
If the EEC was a monstrous hybrid that featured an emergent economic constitution behind a protectionist wall, the GATT was a permissive framework for the development of free trade with few powers of enforcement, subject to political control via the mechanism of one country, one vote. Against the background of the wave of Third World national developmentalism of the 1970s, reflected in numerous expropriation of US firms and the demand for a New International Economic Order, neoliberals turned to schemes for investment protection and third party arbitration beyond the reach of national states, in part as noted above via the reform of the GATT itself. Rossler and Petersmann, recruited, tutored and backed by Jan Tumlir, head of the GATT's research division from 1967 until his death in 1985, followed Hayek in developing an approach to multilevel regulation and constitutionalism that Slobodian calls 'cybernetic legalism': a self-regulating system whose rules are transformed into binding legislation to create a framework within which the "free efforts of millions of individuals" [Hayek] in response to price stimuli or signals produce an unknowable and ever-shifting order (223-4). In this line of thinking, individuals were steered by the demands of the international division of labour, and '[w]hen functioning properly, the world market itself was the helmsman of human actors' (233). After setting out Hayek's thinking at length (224-40), and concluding with his call for a 'thin layer of deliberate design' to be laid over the unconscious and relatively constant instinctive rules of physiology and the unconscious and acquired rules of tradition (238), Slobodian argues that these 'animating ideas' largely informed the WTO, for all that the road to it was 'a twisting one of diplomacy, political economy and power politics', and therefore identifies it as 'the last episode of the twentieth-century neoliberal search for an institutional fix in a world they saw as always threatened by spasms of democracy and the destructive belief that global rules could be remade to bend toward social justice' (257-8).
Mises saw it as the "fundamental social law" of capitalism "to draw the greatest number of human beings into the personal division of labour and the whole earth's surface into the geographical division of labour" through the "reign of competition" (107); Hayek's lengthy and elaborate 'philosophical' or better theological (268-9) explorations were geared solely to justify encompassing legal frameworks that would subject all of humanity to this law. In this prescription, as noted above, states were to be open to the world market, making the internal adjustments necessary to compete internationally; and it was clear from the start that the consequence would be a tendency prevailing over the entire earth toward equalisation of the rate of return on capital and of the wage of labour. As Hayek well understood, this did not mean that the world market was a realm of human freedom. Rather it was one in which prices (the impersonal signals of the market) told people what to do.
To state the obvious, then, a narrative that sees neoliberalism as originating in the 1970s and in retreat since 2007-8 entirely fails to grasp either the secular development of the world market, or the depth and strength of the neoliberal institutions and routines devised to protect and encase it. Slobodian addresses only some of them, but the great strength of his account, conveyed in vivid detail, is to highlight the importance of 'rules set by supranational bodies operating beyond the reach of any electorate' and the 'fundamental depoliticisation of the economic domain' (264-5). In the conclusion, though, he pinpoints a fundamental contradiction, illustrated by the world-wide protests against the WTO: any institution that becomes the visible embodiment of world market discipline will inevitably become a focus of political contention. 'It may be,' Slobodian comments, 'that Geneva School neoliberals were so busy building crystalline fortresses for the world economy that they failed to heed Mises's advice about reinforcing a mass mentality that would favour global rather than national markets as an absolute good rather than a pragmatic good to be favoured or rejected as fortunes changed' (285). This suggests that the building of supranational institutions would need to be supported by more insidious means of working directly on mentality and behaviour - a line taken up not only by Petersmann (2002) in his cynical, crudely transparent and instrumental attempt to codify the rights of capital as human rights, but also by Thaler and Sunstein (2008), and indeed the World Bank (2014; and Cammack, 2014).
References
Cammack, Paul (2014), 'The World Development Report 2015:Programming the Poor', Working Paper 7, The Multilateral Banks and the Global Financial Crisis, December (https://manchester.academia.edu/PaulCammack/world-bank).
Petersmann, Ernst-Ulrich (2002), 'Time for a United Nations "Global Compact" for Integrating Human Rights into the Law of Worldwide Organizations: Lessons from European Integration', European Journal of International Law, 13, 3, 621-650.
Thaler, Richard and Cass Sunstein (2008), Nudge, Yale University Press, New Haven.
World Bank (2014), World Development Report 2015: Mind, Society and Behavior, World Bank, Washington DC.