Thinking in Orders

Globalists: the End of Empire and the Birth of Neoliberalism, Quinn Slobodian, 2019.

Thumbnail: The Arrival, C.R Nevinson, 1913.

Neoliberalism is an ideology many people think they have a grasp of - or at least (some might scoff) many people grasp for when grasping at straws. Criticism of its everyday pejorative usage speaks perhaps to its outsized importance for our intellectual history, since for many, neoliberalism is the ideology that frames our world and our capitalism. Despite this, the teutonic twin/parent/cousin/child of neoliberalism - ordoliberalism - has not yet penetrated the vernacular of politics in the anglosphere. In a way, this is strange. The ‘great’ neoliberals - from Mises, to Hayek, to Eucken, to Böhm - were all ordoliberals. Their influence lives on in institutions which range from the European Union to the WTO. However, much of our collective understanding is owed not to them, but to the ‘rational expectations’ strain of neoliberalism pioneered by Milton Friedman and his Chicago School. This has left, not altogether unfairly, the notion that neoliberalism reduces down to not much more than a state-bad-market-good libertarianism.

In Globalists, Quinn Slobodian argues that to ignore the ordo behind neoliberalism is a mistake. In his view, the world-historical episode most responsible for neoliberalism is decolonisation, and the question of how to preserve market society as empires were dismantled - and former subjects began to question the economic order that remained - was the key concern of its prominent intellectuals. The ordo-neoliberals saw not just a struggle between market and state, or even, as per Polanyi, between the market and society. Instead, their utopia was not a “borderless market without states”, but what Slobodian terms “a doubled world kept safe from mass demands for social justice”; where the ‘doubling’ represents a total division of the political from the economic.

It is worth clarifying what exactly what the prefix ordo means. In its original context - German ordoliberalism - it represented the idea that liberalism needed to be protected by an “economic constitution” on the national scale, if democracy was function alongside market society. Hence the importance of “thinking in orders” - finding rules and legal institutions that could structure said market society. The early neoliberals picked this up, and as their thought matured during the interwar years, projected the ordoliberal idea to the scale of the entire world - what Slobodian calls “ordoglobalism”. There is a clear difference between this worldview and the ostensibly libertarian neoliberalism we know today, as far from anarchists, the ordoglobalists had an essentially imperial political philosophy. For capitalism to flourish, national sovereignty was as dangerous as popular rule; and only truly global legal institutions could protect the market from them. The defeat of nineteenth century liberalism after the Great War was a result of its failure to create such institutions, to explicate and make formal the conditions for its prosperity. These lessons were learnt by the early neoliberals in situ, as many were products of the final years of the Austro-Hungarian Empire. Hayek, for example, saw the Habsburg Empire as a near-ideal model of “double government”, one which had managed, if briefly, to create an economically unified but politically and culturally heterogenous society.

Globalists begins with the birth of neoliberalism, which - as with so many things - was born in the interwar years. Slobodian presents a detail-rich and compelling narrative of this period, one I could not do justice here. He covers the formative, delirious years in Red Vienna; business cycle research amid the new statistical world of the twenties; sparring with and against the League of Nations; and the founding of the Graduate Institute in Geneva (the origin of his preferred label for the ordo-global-neoliberals - the “Geneva School”). The essential point is that the interwar years turned neoliberalism, in a sense, against economics. By the mid-thirties, Mises and Hayek had rejected the promises of business cycle studies, and had arrived at the conclusion that statistics and economic modelling were red herrings. ‘Knowing the economy’ was an impossible task. They came to believe, Slobodian writes, that “this was not a dead end but the starting point for designing the order within which the world economy could thrive”. Thinking in orders became not just politically expedient, but epistemically necessary. The need to insulate the market from democracy was intensified by the fundamental ineffability of the former.

The Second World War, Slobodian wryly notes, was almost a non-event for neoliberal economic philosophy in itself. But the question of how the postwar world should look came to consume the Geneva School. Very quickly, decolonisation established itself as the vital issue. Imperialism had bequeathed the world with gaping disparities between the wealthy and poor, between capital-rich metropoles and their destitute peripheries. A European investor could open a new mine in Rhodesia, secure in his knowledge the Rhodesians stood no chance of expropriating it - the lack of democracy insulating his right to capital. Whether the distribution of resources was fair was irrelevant. All that mattered was the all-important right to property, without which markets ceased to function. Naturally, decolonisation endangered this order. In the words of Wilhelm Röpke (one of Slobodian’s most repulsive characters), the end of empire saw ‘rabies democratica’ spread globally - racist undertones likely intentional. New nations in the Global South had created a double-edged situation for the neoliberal project. With explicit imperial domination gone, the economic structure of empire - what Slobodian calls ‘dominium’ - remained: capital ownership was still concentrated in the hands of the ex-metropole. Postcolonial states chafed under this, and had an incentive to sidestep the market and seize foreign capital for themselves. Especially concerning for the neoliberals was that the institutionalisation of “rabies democratica” in the international realm could allow these states to do so, unopposed. The General Assembly of the United Nations, with a “one nation, one vote” principle, became increasingly unfriendly to the imperial core as decolonisation progressed. Unchecked, what could stop the UN from sanctioning the deconstruction of the liberal international order, one expropriation at a time?

How Geneva School neoliberals tried to answer this question - both in theory and in practice - is, I think, the pivot of Slobodian’s narrative. It is where his books earns its subtitle, “the end of empire and the birth of neoliberalism”. Neoliberalism was in fact born twice - first with the end of the Austro-Hungarian empire, and then with the end of empire writ large. The first birth mattered, but it was the second which gave the movement an identity to coalesce around. The famous first meeting of Hayek’s Mont Pelerin Society in 1947 was held across the lake from Geneva, where the drafting of the doomed International Trade Organisation (ITO) was taking place. As Slobodian explains, the ITO was killed to a significant extent by the Geneva neoliberals, who saw it as an attempt, by Global South states, to codify exactly the wrong kind of order - one which enshrined the right of nations to deviate from free trade and the freedom of capital. Working through the International Chamber of Commerce, they smothered the ITO - and hence, some may argue, sabotaged the Bretton Woods system from the outset. In place of the ITO was the General Agreement on Tariffs and Trade (GATT); which, while a rather toothless institution, would carry the torch of free trade - and free capital - for decades to come. Giving the GATT more bite was on the neoliberal agenda well into the nineties, when, with the birth of the World Trade Organisation (WTO), Geneva School neoliberalism reached both its zenith and, Slobodian argues, found its downfall.

This denouement to Globalists ties many threads. The threat of decolonisation plays a role, but so too does the battle over European integration, which I have neglected to cover here, but the importance of which is underlined when Slobodian describes the WTO as “the rules and institutions governing Europe [on a] global scale”. Europe as a political project had shown how competition law might be implemented globally, and the institutions it had produced - the European Commission and The European Court of Justice - were a blueprint for solving the all-important issues of enforcement and judicial review. All in all, the WTO really was a victory for the Genevans - in 1994, one-hundred and twenty-three nations entered into a system which codified capital order and restrained the economic autonomy of states. This was the antithesis of the world the neoliberals had once feared; one where the capital rights were swept away by a decolonising-expropriating tsunami. But, Slobodian argues, for all their thinking in orders, the aftermath of the WTO revealed Geneva neoliberals had, for all the pursuit of order, found an enduring solution to the problem of democracy. Massive protests in 1999 and the anti-globalisation movement sparked opposition to de-politicisation in all corners. Today, the WTO review system is largely defunct - wrecked, under Trump, by perhaps the greatest beneficiary of the order it represents: The United States. I find myself drawn to Slobodian’s observation that thinking in orders was never a wise idea for the neoliberals - that if the goal is really to insulate the market from democracy, the backroom is more effective than the courtroom.

I do not have any genuine criticism of Globalists to offer. There are, of course, topics I wish were discussed in greater depth. The intellectual opponents of Geneva - social democrats such as Gunnar Myrdal, Nicholas Kaldor, and Karl Polanyi - are mentioned only in passing, and their engagements with the neoliberals are largely absent in the book. I am also curious about another under-explored part of Slobodian’s narrative: on how the semi-transition from Slobodian’s Geneva School, to the Chicago School, took place. But these are not real criticisms so much as requests for additional chapters, or even books. All I can say is that, somewhat ironically, Globalists brought some much-needed order to my understanding neoliberalism. Thinking in orders is infectious.