An essay published in two parts.
Part 1 – Globalists’ greatest fear is not the state – it’s the people. Published by Spiked – 15 March 2019
Globalists’ greatest fear is not the state – it’s the people.
We have entered another unstable era for the world order. Some anticipate a ‘Thucydides moment’, a reference to his history of the Peloponnesian War 2,500 years ago, in which he wrote: ‘What made war inevitable was the growth of Athenian power and the fear which this caused in Sparta.’ Today we could be on the same path as the old and new powers clash. A rising China is fuelling anxieties in declining America and Europe. Meanwhile, escalating strains within the ‘old’ Western world are also adding to the disruptive mix.
The rational approach to a changing world would be for free and independent nations to work out collectively a new order appropriate for our era. However, the dominant globalist perspective has instead been to insist on adherence to the existing ‘rules-based international order’ as established after the Second World War. But perpetuating the current international legal arrangements risks hastening an exploding pressure cooker.
When old powers rely on preserving the existing rules, it is just as dangerous, if not more so, for the world than the actions of others who evade or seek to rewrite those rules. This is why contemporary globalists are as much a threat to world peace as those they condemn as old-fashioned economic nationalists. When incumbents use their privileged positions to try to preserve the status quo at the expense of frustrating their challengers, this makes for a potentially explosive international environment.
This unwise stance appears so popular among elites because it reflects their deep attachment to the status quo. Political elites no longer promote alternative visions for the future. This doesn’t only represent a loss of imagination – it also reveals an unfortunate loss of belief in the capacity of people, and their free democratic nations, to act responsibly. Having given up on political deliberation, rule-following has become a substitute for prudence and for new thinking.
This is far removed from Immanuel Kant’s outline of the path to world order in his influential essay on perpetual peace. Writing at the end of the 18th century, Kant explained that he rejected relying on international law, on the grounds that law was an apologia for power. Instead, he argued that the cause of world peace could only be based securely on freedom and reason. Kant was confident that humanity not only possessed reason but also that we would ultimately be guided by it.
Today’s globalists have lost faith in reason guiding people’s actions. Their disregard for democracy was revealed starkly in 2016, when they openly showed their contempt for the British people who voted to leave the European Union and for the American people who elected Donald Trump. The globalist indifference to respecting democratic decision-making rests on their disavowal of the efficacy of human agency.
This also informs the fatalism behind the modern perspective on globalisation. It is said that we inhabit a world determined by global market forces over which we can have little influence. This is to see globalisation as an objective force that appears almost impervious to human will and action, and it informs the most critical and far-reaching of the globalist tenets: that national policymaking has become much less effective, verging on being redundant. Instead, we are increasingly at the whim of impersonal, autonomous global forces.
Take, for instance, this 2007 statement from Alan Greenspan, the then recently retired chairman of the US Federal Reserve, who was asked by a Swiss newspaper who the next president of the United States might be. ‘We are fortunate’, he replied, ‘that, thanks to globalisation, policy decisions in the US have been largely replaced by global market forces… it hardly makes any difference who will be the next president. The world is governed by market forces.’ (1)
This sums up the most important political corollary of the belief in ascendant globalisation: that the theory and practice of national sovereignty and the nation state is undermined by a world in the process of rapid change. But without the nation state, we have no working vehicle for popular sovereignty. Globalism’s fatalism becomes self-reproducing. Globalisation is thought to determine that democracy is unable to operate, thereby determining that people have no way of exercising control over the unfolding of globalisation.
A globalist like Greenspan belittling democracy is not incidental. An antipathy to politics, and especially to mass politics, has been an ever-present feature since globalism’s intellectual origins in the 1920s and 1930s. It is poignant that this historical period up to the present itself offers many illustrations that globalisation is not a natural process. Today’s interconnected world has been shaped over those decades, especially since the Second World War, by an alliance of politicians, other elites and experts, including the likes of Greenspan himself. Globalisation cannot legitimately be presented as a self-driven phenomenon divorced from politics.
The rule of rules
Globalisation, in short, refers to the belief that the world – economically, politically and ecologically – is shrinking fast in its social and physical dimensions. But what do we mean by ‘globalism’ and ‘globalists’? Who are they?
Some describe globalists as the ‘Davos crowd’, the people who gather in Switzerland every January at the annual meetings of the World Economic Forum. Many fly in by private jet or helicopter to signify they are the crème de la crème of the global elite. But the globalists are much broader than Davos attendees.
They include those who lead large corporations and run international institutions such as the World Trade Organisation (WTO), the International Monetary Fund (IMF) or the EU. But, tellingly, they also include most of the people running the West’s national official organisations and state institutions. Prominent over the past couple of decades, and even more so since the financial crisis, are the leaders of the supposedly ‘independent’ central banks – it is telling that Greenspan, who believes the world is governed by impersonal market forces, thought it worth more than two decades of his life to lead the US one.
Globalism, in turn, describes the dominant perspective of the postwar Western political and business establishment. We have already touched on its attachment to rules. In fact, the defining globalist ethos can be summed up as a ‘devotion to a world of rules’. Many globalists illustrate their ‘liberal’ credentials much more through their affinity to rules than through actively pursuing liberty and freedom.
John Ikenberry, a globalist political scientist and apologist for US domination, summed this up with his claim that Americans are less interested in ruling the world than in ‘creating a world of rules’ (2). Similarly, in his acclaimed review of the financial crisis, historian Adam Tooze wrote that the crisis had exposed globalisation as resting upon rules. In querying the conventional view of globalisation as a ‘quasi-natural process’, Tooze pointed to the deeper convention of a rules-based regime. Globalisation is really ‘an institution, an artefact of deliberate political and legal construction’ (3).
Of course, devotion to rules does not mean globalist politicians always adhere to them. Globalist governments, especially in powerful countries, have been known to break them with relative equanimity when their national circumstances require it. The US, for instance, regularly violated the rules that it claimed to uphold, as it conducted unauthorised military interventions and covert operations overseas.
And the European Commission treats larger states that break its budget rules much more leniently than other smaller ones. For example, Germany and France, among many other EU countries, have frequently broken the EU’s stability and growth pact rule to limit public deficits to three per cent of GDP without being meaningfully sanctioned.
While formally governing by rules has been the globalist norm since the Second World War, it did not start then. The interwar desire by Britain, France, Germany and other developed countries to return to the prewar gold standard expressed the desire by politicians to be able to follow rules. Although rejoining the gold standard subsequently became regarded as a big mistake, in tune with Keynes’ famous critique, in the immediate postwar years returning was a mostly uncontentious goal. By the end of 1925, 35 currencies worldwide were either officially convertible into gold or had been stabilised for at least a year. The return to the gold standard was seen as pursuing a rule that, in effect, had only been ‘suspended’ because of the emergency contingent circumstances of war.
Re-adoption of the standard was thought to impose some necessary political ‘discipline’ through binding fiscal and monetary policy actions. In this spirit, Montagu Norman, the governor of the Bank of England, saw the return to gold as ‘knaveproof’. A common adherence to the gold standard by developed countries created a de facto international rule.
It is pertinent for an appreciation of the significance of rules today that the essence of the gold-standard rule was a domestic commitment mechanism. Alignment limited discretionary state policies at home. It tied the hands of government, thereby shielding the political class from democratic pressures to abandon ‘hard-money’ deflationary policies. In fact, the breakdown of the gold standard in 1914 has been partly attributed to the rise of democracy, because it was the newly enfranchised masses who suffered the most from the domestic austerity measures taken to maintain adherence to the rule.
In retrospect, it was easier to see that the overvalued return to the gold-standard rule caused much economic and social damage during the interwar period in Britain and elsewhere. And a stubborn adherence to following rules ultimately contributed to the tensions that resulted in the resumption of global conflict in 1939. Nevertheless, this lesson was not learned. In the aftermath of the Second World War bloodbath, efforts were redoubled to try to govern through an organised regime. Now we turn to assess an increasingly forthright feature of the globalist school: its promotion of the rule of law.
The malleable ‘rule of law’
Globalists often define liberalism as supporting the ‘rule of law’. However, the meaning of this term is probably ‘less clear today than ever before’ (4). Moreover, a leader of the critical-legal-studies movement has suggested that, through elevating procedural justice, appealing to the ‘rule of law’ enables the powerful to ‘manipulate its forms to their own advantage’ (5). We should be aware of this suppleness when we hear the term ‘rule of law’ used so often in globalist statements. It is therefore important to assess the phrase within the context in which it is used.
Historically, there is no doubt that the rule of law was a crucial element in the spread of liberty and freedom. This juridical view of freedom was well captured by the eminent interwar Supreme Court Justice, Louis Brandeis. He observed that ‘the history of liberty is to a large extent the history of procedural observances’.
The key feature of the traditional ‘rule of law’ principle was that everyone is equal before the law. Officials as well as ordinary citizens should be subject to its dictates. Nobody – even the richest business person or top politician – should be ‘above the law’. In this application, the rule of law provides a vital guard against the arbitrary exercise of power. In the past it has certainly helped to promote a healthy scepticism towards the rulers by those ruled.
The idea of the rule of law originated in Ancient Athens. Nomos (the primacy of law) took over from physis (nature) as a better way of ordering society. Under Athenian democracy, every citizen, regardless of wealth and power, was equal under the law. Representing the poor of their time, Athenian sailors in the agora argued for the law to protect the masses against the whims of the wealthy and powerful.
The concept of the rule of law was also adopted during the Roman Republic. In the early years of the republic, only the elite of Rome knew what the laws were, which obviously favored the aristocracy. In 450 BC, after about 50 years of the republic, this particular flaw was rectified. Roman laws were written down for the first time as the ‘Twelve Tables’, so that everyone could know the law. Making the laws public gave parity to everyone, enabling the law to treat all people equally.
The rule of law principle was reintroduced in modern times through Britain’s Glorious Revolution of 1688. This removed the ‘divine’ rights of kings and the political privileges of the aristocrats. Instead, political power could only be exercised according to procedures and constraints prescribed by publicly known laws. This rule of law positively required all persons, including governmental officials, to obey the laws and to be held accountable through the courts if they did not. Moreover, the laws could be changed only through constitutional procedures and could not be nullified or overridden by individual fiat.
This approach still provides an important protection against oligarchy and despotism, and allows for the defence of minority rights. However, that liberal essence of the rule of law has been increasingly eroded over the past century, and especially since the 1970s. Instead the ‘rule of law’ and the judicial system have been turned into a vehicle for some very illiberal and undemocratic actions in flouting the wishes of the people.
No doubt many globalists will disagree with this view. However, it is probably less controversial when seen in the context of the colonies or neo-colonies. John Sydenham Furnivall was a British colonial administrator in Burma for 30 years, until the early 1930s, when he left to become a scholar critical of Western imperial policies. Dubbed as a ‘reluctant imperialist’, he challenged the then conventional view that economic development was the precondition for self-government and democracy in colonised territories. He argued the reverse: begin with autonomy, and social and economic development would follow.
Reflecting his pro-democratic perspective, Furnivall argued that the ‘rule of law’ imposed by Western powers on their colonies was mostly designed simply to promote commerce (6). He explained how this version of the ‘rule of law’, far from empowering and uniting people, merely expanded commerce at the expense of the social and political integrity of colonial society. In the aftermath of the Second World War, when genuine Third World autonomy was clearly absent, Furnivall’s claim was hard to dispute.
So the appeal to the ‘rule of law’ should not be regarded as a universal good. It needs to be assessed within its specific social and political circumstances. Consider one definition of liberalism suggested by the political scientist Francis Fukuyama. He said liberalism means having ‘generally accepted rules that put clear limits on the way that the [nation] state can exercise power’ (7). This does not sound objectionable.
However, the emphasis on ‘clear limits’ contains the potential for counterposing the ‘rule of law’ to rule by popular democratic will. Which is what happened with the spread of mass suffrage in the 20th century, when the idea of putting constraints and limits on what the rulers could do has turned into putting constraints and limits on what governments accountable to the people could do. The meaning of the rule of law has shifted, giving it precedence over rule by law – lawmaking that is politically accountable to ordinary people.
In the 1930s, US President Franklin D Roosevelt came up against this potential judicial block to liberal democracy. He and his Democratic Party had been elected in 1932 with a mandate to implement measures to combat the effects of the Great Depression. The Supreme Court, however, ruled against some of the New Deal measures as being ‘unconstitutional’, and only narrowly endorsed others by a five-to-four split decision.
After being re-elected in 1936 with an even larger majority, Roosevelt charged the Supreme Court as having been ‘acting not as a judicial body, but as a policymaking one’. His proposed remedy of replacing Supreme Court justices could not get legislative approval – another part of the American ‘checks and balances’ – but through his electoral mandate he was seen to have won on the principle. The Supreme Court felt compelled to back down and approve his earlier New Deal policies.
Roosevelt’s clash with the courts in the 1930s anticipated the anti-democratic tendencies in the post-1945 evolution of the rule of law. By appealing to the sanctity of the ‘rule of law’, juridified institutions can see themselves as justified in overruling the wishes of the people expressed through popular votes and elections. The responsibility of governments to act on their electoral mandates is devalued by insisting on their overriding responsibility to the rule of law.
Look at this typical formulation from the then United Nations secretary-general, Kofi Annan, who, earlier this millenium, defended ‘a principle of governance in which all persons, institutions and entities, public and private, including the state itself, are accountable to laws that are publicly promulgated, equally enforced and independently adjudicated, and which are consistent with international human-rights norms and standards’. Again, on the surface, this does not sound overtly undemocratic.
The institutions of government should be bound by the rule of law. Governments should not be free to flout laws that apply to others. But another essential democratic principle is that governments should be accountable to their electorate. The laws to be followed should be those that the people agree with. If enough do not vote for them or subsequently disagree with them, they can replace the government and change the laws at the next election.
This relationship is at best blurred, or even subverted, when non-elected UN officials assert that the law they want to be followed by governments has to be in accord with certain ‘international’ standards. When those often vague and imprecise international ‘norms and standards’ are given an effective veto over domestic legislation, people’s decision-making capacities are being overridden in principle, even if not always in practice.
Moreover, this perspective on the rule of law, where government actions need to meet certain internationally set criteria, has already legitimated international intervention in the affairs of sovereign states. Many nations have been invaded because of claims they were in breach of the law, including in recent times Somalia, Serbia, Iraq, Libya and Syria. As the historian Mark Mazower observed, the appeal to law has become a ‘vocabulary of permissions, a means of asserting power and control that normalises the debatable and justifies the exception’ (8).
The increasing use of the rule of law to validate the erosion of national sovereignty is part of the broader reimagining of the postwar international order, insofar as postwar international institutions are increasingly attributed authority over national governments. Their elevation above popular sovereignty endows them with a hallowed and almost enchanted power.
Public responses from many globalists to Trump’s well-known disregard and hostility to these organisations have made such opinions more explicit. A collection of international-relations scholars argued for preserving the existing international order against some of Trump’s anti-globalist outbursts in a statement published in the New York Times (27 July 2018). They claimed that the UN, NATO, the WTO, the EU and other postwar institutions have provided ‘economic stability’ and ‘international security’, and had brought about ‘unprecedented levels of prosperity’ and the ‘longest period in modern history without war between major powers’. Giving so much clout to international institutions turns a wish into a false reality.
We can never know if ‘peace’, in the sense of avoiding war between the major nations since 1945, would have happened without these institutions because there is only one history. However, these institutions ultimately only express the forces and pressures of the nations that make them up. In themselves, the institutions cannot do anything when powerful member states ignore them. The League of Nations, for instance, ‘failed’ to prevent the Second World War, not because of some institutional defect, but because capitalist nations were on a collision course moulded by the economic and geopolitical conflicts of the time. The League of Nations was powerless to prevent these.
Another international-relations expert, Stephen Walt from Harvard, not only declined to sign that New York Times statement, he also challenged its assumptions. He explained that these institutions were set up in a different era from the present. Most, he suggested, were no longer appropriate for today’s world. Walt cautioned that nostalgia for a past that never existed would not help to address contemporary issues. The ‘so-called liberal order’ was not quite the nirvana that people now imagine it was.
Walt showed this was never a fully global order. There was also an ‘awful lot of illiberal behaviour’ going on, even by countries and leaders who constantly proclaimed ‘liberal values’. The US, he reminded his colleagues, has propped up plenty of authoritarian illiberal rulers throughout the Cold War (and has continued to do so since). A more recent disdain for international rules came when the US led the invasion of Iraq in 2003 without UN approval.
White House administrations have not hesitated to break the rules of the liberal order in order to follow their national interests. This is what happened when the US unilaterally dismantled the Bretton Woods currency exchange system in 1971, because it could no longer follow the rules it had earlier approved. Domestic interests simply assumed greater importance for the US than continuing its core commitment to the international monetary system.
Walt went on to point out that some of the institutions being defended today are actually a source of the trouble we face. He gave the example of NATO. Established in a different era to coordinate Western military power during the Cold War, Walt said that, since the end of the Cold War, NATO has turned into a disruptive force. Its pursuit of an ‘open-ended and ill-conceived eastward expansion’ has rekindled international tensions, not assuaged them.
Endowing these institutions with a supreme power is not only misleading – it is also corrosive to democracy. Promoting unelected international institutional authority undermines accountable national authority. Citizens’ diminished role in decision-making is reinforced when we are told that international organisations are the real peacemakers and the true engineers of prosperity. The supposed omnipotence of these bodies gives them an almost holy status. This is why just criticising them can appear sacrilegious to some globalists.
Anti-nation state, but not anti-statist
Globalism is often perceived as a natural corollary to a more globalised economy. It seems likely that the growing interdependence of national economies since the late 19th century was a necessary basis for the emergence of globalism. But it was not a sufficient one. How did its ideas become so powerful?
Returning to Greenspan’s statement from 2007, three points are pertinent. First, it captures the fatalist ethos of globalism: ‘It hardly makes any difference who will be the next president. The world is governed by market forces.’ The implication is that since nation states do not control anything, there is little we can do to influence things by voting. It is the market that determines our circumstances.
Second, the statement is especially significant because of who made it. Until his retirement a few months earlier, Greenspan had been regularly feted as ‘the most powerful man in the world’. He was speaking before the financial crisis hit, when his reputation, and that of central bankers generally, became somewhat tarnished. We have the irony of the former leader of the world’s most powerful central bank highlighting powerlessness in the face of globalisation. That counter-position, between the establishment’s levers of real power and the claim of impotence, is not an incidental paradox of globalism: it is intrinsic to it.
And third, Greenspan’s Central European heritage is not unimportant to the history of globalism, even if, in his case, he is a second-generation exponent.
Greenspan was born in New York in the 1920s, living first in its Washington Heights district. This was known at the time as ‘Frankfurt on the Hudson’, because of its large number of Jewish immigrants from Germany. His parents were actually of Central European descent: his father Romanian, his mother Hungarian. Greenspan’s lineage is relevant because of the important influence of classic neoliberalism on the development of globalist thinking.
Two narratives about globalism can be read into Greenspan’s statement. The standard and most popular narrative is of globalism as the twin of ‘neoliberalism’, expressing the ‘market fundamentalist’ view that state intervention is bad for the economy. The government interferes too much with the self-regulating power of free markets and therefore undermines prosperity. This perspective explains why Greenspan regarded it as ‘fortunate’ that globalisation was rendering national government redundant. We call this the ‘anti-state’ narrative.
An alternative narrative is actually much more germane: a ‘beyond politics’ narrative – specifically a ‘beyond mass politics’ narrative. Greenspan’s statement incorporates the conventional presumption that the West has reached the ‘end of politics’. This presumes that politics has lost its efficacy in the face of global forces. As a result, making policies, especially economic policies, is now pretty irrelevant if not detrimental, because everything is driven and determined by the impersonal force of globalisation.
The American historian Quinn Slobodian explained this ‘beyond politics’ narrative in his excellent book, Globalists: The End of Empire and the Birth of Neoliberalism (2018). Slobodian nicely characterised globalism as the belief that ‘politics had moved to the passive tense’. The only actor remaining was the ‘global economy’. This essay is beholden to Slobodian’s original research and compelling thesis.
This second narrative highlights the centrality and dominance of the contemporary denial of human agency. The standard anti-state narrative is actually misleading. Globalists are not really against the state. Globalists, within their various national and international institutions, do not go to work in the morning to put their feet up all day and do nothing in their supposed aversion to state activity. What they are really hostile to is not the state, but politics.
Globalists worry about unruly, disruptive and possibly irrational politicians who engage in activities that break from their liberal model. This also means they are suspicious of democracy itself, because they assume the masses are not all as rational and clear-sighted as they are. Instead, ordinary people are susceptible to being swayed, misled or duped into electing ‘unruly, disruptive and possibly irrational politicians’.
Even the openly self-declared neoliberals among the globalists are not against state activism as such. Certainly, they will often denounce planning and the state control of business. But underlying this, they are even more concerned about what they see as the destabilising impact of politics. In particular, they criticise what they call ‘discretionary politics’. These are political policies they think interfere with the free operation of spontaneous market forces. Nevertheless, they are quite open to the state that helps fulfill their ideal of a free-from-politics market order.
For instance, Lionel Robbins, one of Britain’s leading neoliberal economists of the 20th century, sympathised with the emphasis on the classical liberal conception of national order based on a strong and energetic state. Increasingly, from the 1930s, he suggested the same principle of a strong, energetic state should also apply on an international scale, in some form of federal authority.
Similarly, the ardent neoliberal Friedrich Hayek, in his 1979 book Law, Legislation and Liberty, explicitly rejected the mischaracterisation that he was an advocate of a ‘minimal state’. He argued that it was ‘unquestionable that in an advanced society government ought to use its power of raising funds by taxation to provide a number of services which for various reasons cannot be provided, or cannot be provided adequately, by the market’. This is hardly a manifesto for small-state globalism.
Coincidentally, Hayek published this denial of being an anti-state purist around the same time that a new British prime minister, Margaret Thatcher, was telling her cabinet colleagues that Hayek’s 1944 book The Road to Serfdom should be compulsory reading. Despite her free-market reputation, given the expansion, rather than contraction, of the state during her premiership, the obituary for Thatcher in The Economist (8 April 2013) was appropriate. This mouthpiece of free-market globalism claimed that the essence of Thatcherism was ‘a strong state’ alongside her commitment to a ‘free economy’.
In a Chilean newspaper interview given during General Pinochet’s continuing military dictatorship, Hayek reinforced his perspective:
‘When a government is in a situation of rupture, and there are no recognised rules, rules have to be created in order to say what can be done and what cannot. In such circumstances it is practically inevitable for someone to have almost absolute powers… It may seem a contradiction that it is I of all people who am saying this, I who plead for limiting government’s powers in people’s lives and maintain that many of our problems are due, precisely, to too much government.
‘However, when I refer to this dictatorial power, I am talking of a transitional period, solely. As a means of establishing a stable democracy and liberty, clean of impurities. This is the only way I can justify it – and recommend it.’ (9)
Temporary or not, Hayek is explicit in supporting a strong, even authoritarian state, to set the rules. Neoliberalism’s most famous figure, therefore, was no ‘minimal statist’.
When globalists allude to being anti-state they are really expressing their opposition to the nation state, rather than state intervention per se. Moreover, when they are critical of the nation state, they are not even really against the ‘nation’ as an existing political entity. Rather, they are mostly against the idea of political nationhood and of nationalism.
Most globalists within today’s Western elites feel politically and culturally estranged from their own national institutions. This can make them inconsistent in pursuit of national interests, even doubtful about them. Elites find it easier to get things done through international networks because they are already increasingly detached from the lives and outlooks of the ordinary citizens at home.
Politicised nations are suspect to them because of their intrinsic association with the ordinary people of that nation. Their underlying concern is how common people, many of whom do not share their advanced thinking, can influence what the state does through the democratic process. And since democracy only exists in the national form, this concern underpins their belittling of the ‘nation state’.
It is therefore a misleading caricature to claim that globalists seek a ‘borderless’ world, or a ‘zero-state’ society. A few do, but what really unites them is a yearning for a world insulated from popular democracy and accountability. States remain important but they are thought to operate best through the actions delegated to expert bureaucrats and regulators, not accountable legislators and politicians.
This is what drives the constitutionalist and legalist impulse within globalism – it seeks to constrain national economic policymaking by rules-based disciplines. The legal regulation of commerce is removed from domestic democratic controls in favour of following rules that limit legislative autonomy. Legalism is a way for politicians to try to absolve themselves of responsibility when things go wrong: ‘We were only following the rules.’
Following rules is a way to avoid having to exercise judgement. In this manner, rules complement the depoliticising implications of globalisation theories. If global forces denude the nation state, adherence to the rules provides a modest fig leaf for practical governing.
In a special report on the changing role of the state in 1997, the World Bank summed up mainstream thinking when it called for both domestic and international restraints on governments (10). The report asserted that it is now ‘generally accepted’ that some areas of public decision-making require ‘insulation from political pressure’. It wasn’t clear by whom this was ‘generally accepted’. No doubt among globalists, rather than among the people who are being insulated against.
In this spirit, the World Bank suggested countries strengthen ‘formal instruments of restraint’ through an effective separation of powers and ‘judicial independence’ (11). It spelt out that in the ‘technical and often sensitive area of economic management’, some protection of decision-making from the pressure of political lobbies was ‘desirable’ (12).
This proposal for shielding economic policymaking from democratic influences expressed not the ‘retreat of the state’, but the aspiration for a more ‘effective’ state through a ‘redefinition of global governance’. For the World Bank ‘reinvigorating public institutions’ means designing effective rules and restraints to check ‘arbitrary’ state actions (13).
‘Reinvigorating’ sounds a positive notion, but it implies restraining the public’s control. The World Bank didn’t hold back from this interpretation in practice. In the early 1980s, it applauded the Pinochet military regime in Chile for its regulatory reforms of the telecommunications industry.
Globalism, then, as an outlook, is informed not by borderlessness, or even anti-statism. Rather, at its rule-bound heart is an aversion to democracy and the national form in which it is exercised.
(1) Quoted in Buying Time: The Delayed Crisis of Democratic Capitalism, by Wolfgang Streeck, Verso, 2014, p213
(2) ‘Illusions of Empire: Defining the New American Order’, by John Ikenberry, Foreign Affairs, March/April 2004
(3) Crashed: How a Decade of Financial Crises Changed the World, by Adam Tooze, Allen Lane, 2018, p575
(4) ‘“The Rule of Law” as a Concept in Constitutional Discourse’, by Richard Fallon, Columbia Law Review, Vol 97, 1997, p97
(5) ‘The Rule of Law: An Unqualified Human Good?’, by Morton Horwitz, Yale Law Journal, vol 86, 1977, pp561, 566
(6) Colonial Policy and Practice: A Comparative Study of Burma and Netherlands India, by John Furnivall, Cambridge University Press, 1948
(7) ‘On Why Liberal Democracy Is In Trouble’, by Francis Fukuyama, National Public Radio, Morning Edition, 4 April 2017
(8) Governing the World: The History of an Idea, Mark Mazower, Penguin, 2013, p 404
(9) ‘Friedrich Hayek: An interview’, El Mercurio, 12 April 1981
(10) World Development Report 1997: The State in a Changing World, World Bank, 1997
(11) Ibid, pp109, 117
(12) Ibid, pp8, 116-17
(13) Ibid, p3
Part 2 -The truth about neoliberalism: it is the fear of the nation state as a democratic force that underpins the neoliberal project. Published by Spiked – 22 March 2019
‘Neoliberalism’ is today often just used as a swearword for anything some leftists dislike about capitalism. So, all discordant features of contemporary economic life – public-private partnerships, public-spending restraint, inequality and so on – are routinely attributed to ‘neoliberalism’, as if that label is sufficient to damn them.
When commentators try to go beyond neoliberalism as a mere pejorative, they tend to conceive of it as an Anglo-American phenomenon, with the Chicago School of economists, and Ronald Reagan and Margaret Thatcher, presented as its key protagonists. But the truth is somewhat different. Neoliberalism’s intellectual heritage is actually much more central European than it is American or British.
Carl Menger, the founder of the neoliberal Austrian School of economics, who died in 1921, was born in present-day Poland. And its two leading figures, both of whom came to prominence during the 20th century, were also from central and eastern Europe. Ludwig von Mises was Ukrainian, and Friedrich Hayek was born in Vienna. What these thinkers all shared was a set of unusual formative experiences: a proximity to and a greater personal awareness of the 1917 Russian Revolution and, later, of Stalinism and Nazi fascism.
Moreover, neoliberalism was never really simply an economic doctrine. Rather, it was much more a political project.
It emerged, then, partly from a critique of the spread of national sovereignty coming out of the post-First World War dissolution of the empires. Alongside the demise of the German and Russian empires, the Ottoman and Austro-Hungarian empires also came to their end. Many new nation states, politically nascent several decades prior, emerged in their stead. The thinkers, who later called themselves neoliberals, were hostile to this development. They saw national sovereignty as an impediment to the ‘universal economic freedoms’ they championed. Their favoured alternative to the nation was some mix of ‘world government’ with ‘individual consumer sovereignty’.
For example, many who were involved in setting up the famous neoliberal Mont Pelerin Society in 1947, not least von Mises and Hayek, had grown up destined to serve the now deceased Austro-Hungarian empire. They were unhappy with its dissolution, and came to promote the old empire alongside another failed institution, the interwar League of Nations, as being good models for international federation. Such cross-border organisations, they believed, could help bring about economic unity across countries and secure the benefits from a wider division of labour.
By the 1930s, neoliberals were among the most clearsighted in favouring supranational state intervention to preserve and secure the private-property-based capitalist order. Towards the end of the Second World War, von Mises suggested reforming the League of Nations as an international government. He hoped it might ensure the free movement of goods, services, capital and people, thereby anticipating by half a century the European Union‘s Single Market ‘four freedoms’ rulebook. Von Mises undoubtedly believed in the ‘invisible hand’ of the market. But he also thought it needed, to borrow an evocative phrase from Harvard historian Slobodian, ‘an iron glove’ of a supranational state to give it protection (1).
Most neoliberals, including von Mises, Hayek and Robbins, accepted that the nation state was not just going to disappear. Instead they proposed a form of ‘double government’: there would be both national and supranational states. What they called ‘cultural’ issues could still be managed at the national level, but the running of the economy would be separated from the nation and pursued at a world level. This ‘double government’ system was seen as a way to institutionalise their ultimate aim: the separation of politics from economics.
Double government would detach the rule of nation states from the rule of capital and private property. This represented a division between what neoliberals called imperium (the rule of people) and dominium (the rule of things). They sought to depoliticise the economy permanently, freeing it from the interference of politics and people, and leaving it to be overseen by a non-political supranational state.
Neoliberal, early globalist ideas therefore also anticipated the subsequent depoliticisation of economic policy that has become so evident in recent decades. Indeed, since the 1980s, especially across Western countries, authority and policymaking has been outsourced to unaccountable bodies such as independent central banks and, most blatantly, to the EU. National politicians across Europe have deferred power, responsibility and, sometimes, convenient blame to the Brussels apparatus. Accountability for policy at home can be evaded when it is claimed ‘EU rules’ preclude doing what people want or need.
On the one hand, neoliberalism’s interwar ideas fully appeared to anticipate the postwar economic framework of the IMF, the International Bank for Reconstruction and Development (IBRD) – subsequently renamed the World Bank – the General Agreement on Tariffs and Trade (GATT), and, later, the European Community (which became the EU). On the other hand, when these institutions were actually set up, many neoliberals thought they were flawed, on the grounds that they still ceded too much economic power to nation states.
However, this intellectual reaction did not stop neoliberals becoming active in the new regime. The German version of neoliberalism, which in 1950 was renamed Ordoliberalismus, was probably the most explicit in spelling out the state’s necessary responsibilities. Before the war, Ordoliberalismus’s founder Walter Eucken, from the Freiburg School, called for a ‘strong state’ to be able to stand above the interests of lobbies. According to Werner Bonefeld, a political scientist, this form of neoliberalism conceived the relationship between market and state as that between a free economy and a strong state.
In this spirit Lars Feld, the current director of the Walter Eucken Institute (set up in the mid-1950s following Eucken’s death in 1950), describes ‘classic neoliberalism’ as the government providing a rules-based, constitutional and legal framework to shape markets. Giving some cover for espousing a ‘free market’, he cautioned that government should not intervene in day-to-day economic decisions.
Feld describes the state as the ‘concentrated force’ of the system of liberty. Bonefeld therefore suggests that Ordoliberalismus is best characterised as an authoritarian liberalism, which has since been realised in the form of the EU (2). Postwar globalist Jan Tumlir, a lawyer and chief economist at GATT for nearly two decades from 1967 until 1985, also conceived of the EU in neoliberal terms. As he put it in 1983, ‘the protection of the private economy from the government was the eminent idea in forming the European enterprise’ (3).
Hayek pursued the same approach in arguing for global institutions to safeguard capitalism. For him, this meant protecting what he called the ‘negative right’ for foreign investments to have freedom from expropriation, and the right to move capital freely across borders.
Hence the welcome many neoliberals gave to the EU’s Economic and Monetary Union (EMU) and an independent European Central Bank (ECB). This amounted to an ‘economic constitution’ for Europe. In a similar vein, some neoliberals also support the controversial Investor-State Dispute Settlement provisions in recent mega-trade arrangements, which give businesses operating in foreign territories legal rights over the host nation state.
Drivers of the global order
The postwar realisation of the limited ‘double government’ idea established the coexistence of the nation state alongside a set of international bodies. The objective was for a more controlled world of states than the League of Nations had achieved. This aspiration was born of the harrowing experiences of the first half of the 20th century. While US global hegemony was a precondition for this postwar order, it is important to note that continental European figures were prominent in influencing the forms the order took. This reflected the fact that the harrowing experiences, to which the postwar order was a response, were felt most sharply in then German-occupied and wartorn central Europe.
There were three concerns motivating the architects of the postwar order. The first was a return of fascism, of international conflict, and ultimately of another world war. Second, they were worried about the collapse of the economic system, as had nearly occurred in the 1930s slump. And third, they were anxious about the power of the masses, of people taking matters in their own hands.
This last fear had been growing ever since the Russian Revolution. It was later reinforced by the conventional (though misleading) notion that Hitler and the Nazis had been elected democratically in 1933 (4). The fusion of these three concerns, which I will now look at in more detail, helps explain the globalists’ policies and behaviours throughout the postwar period.
1) Preventing conflict
The immediate worry for globalists concerned the resumption of international conflict. It is unsurprising that the terms globalism and global first began to gain intellectual currency soon after the outbreak of the Second World War (5).
The conflagration of 1939 marked the onset of the first truly global war. Up until then, the war of 1914-18 had usually been called the Great War. Although there was fighting in Asia and Africa, this earlier war had been predominantly fought on European soil. Some say the Great War only started being widely called a world war in 1939. Time magazine is reputed to have coined the term ‘World War I’ in its issue of 12 June 1939. From this new sense, and threat, of global warfare, minds soon turned to the need for a global plan for the peacetime order.
This was when the globalists first emphasised the global at the expense of the national. Rosenboim describes how a transnational network of globalist thinkers emanated from the traumas of war. The brutal consequences of the actions taken by sovereign Germany and Japan seemed to overwhelm any earlier appreciation of the benefits of national sovereignty. Fritz Scharpf, the former director of Max Planck Institute for the Study of Societies, wrote that after 1945 political authority on a nation-state scale seemed to lose much of its claim to ‘optimality’ (6).
Scharpf was in good company. Internationalists of various political creeds decried ‘self-interested’ sovereign states as the cause of war, and questioned the effectiveness of the national state as a standalone political unit. Since a federation of democratic nations had been necessary to defeat fascism, a similar sort of collective seemed an appropriate vision for a durable postwar order. It was also clear that simply reintroducing a loose League of Nations-type grouping would not be sufficient to preserve peace. So, instinctively, they took the technocratic route of adopting rules and institutional systems to try to cement international cooperation.
Hence the priority the new globalists gave in 1944, even as the bloodbath continued in Europe and Asia, to the Bretton Woods international monetary system for regulating currency rates, and setting up the IMF and the World Bank. These international arrangements were forged to prevent a recurrence of the chaotic interwar conditions. The UN was launched in San Francisco in June 1945. A year later in Geneva, Lord Cecil, who had addressed the first assembly of the League of Nations in 1920, declared: ‘The League is dead. Long live the United Nations.’ The GATT launched a year after that, in 1947.
The creation of GATT embodied the preferred, and conciliatory, postwar narrative about what had caused the conflict. This emphasised economic rather than political causes, blaming the war on an escalation that began with the use of discriminatory trade policies, primarily through tariffs. As a result, the first article of GATT committed its members to non-discrimination. Known as the ‘most favoured nation’ principle, trade concessions granted to one member were to be applied immediately and without conditions to all other members. Adherence to this provision would therefore prohibit the sort of discriminatory trade policies that had been pursued in the 1930s and had seemingly led to inter-imperialist rivalry.
Similar sentiments were to the fore of the UN’s founding charter, in which members had come together to ‘save succeeding generations from the scourge of war’. Collective problem-solving sounded very attractive to leaders who, twice in their lifetimes, had seen fighting bring ‘untold sorrow to mankind’ (7).
However, this appeal to the responsibilities of member states meant that some mid-century globalists were openly disappointed that the UN charter continued to embrace national state sovereignty. Intellectuals, from HG Wells and Barbara Wootton to Hayek himself, expressed misgivings about the establishment of an international organisation that depended upon and reinforced the sovereignty of its member states. But, in truth, this dependence was a result of the decisive role the nation-state apparatus played in collectively prosecuting and winning the war. A fact that tempered the idea of completely curtailing the nation state’s role now that the war was over.
In fact, the organised planning that underpinned the success of the Allied war effort had impressed even right-wing thinkers. However, they argued that in the new global political space that had developed, the nation was simply too limited to be effective on its own. Hence they called for some form of international organisation, while retaining a role for the refashioned nation state. In the end, most globalists went along with constructing a new order around the extant nation states, limiting their powers without abolishing them.
2) Containing the capitalist crisis
The second motivating concern behind the postwar order was the fear of capitalist breakdown. The slump of the 1930s shook Hayek and his Austrian School colleagues just as severely as it did John Maynard Keynes and his fellow mainstream thinkers. Hayek and Keynes simply took different routes to save capitalism. Significantly, though, the paths taken were not that different, as illustrated at the famous Walter Lippmann Colloquium in Paris in 1938.
This was where von Mises, Hayek and others in attendance chose the label for their ideas of ‘neoliberalism’. Walter Lippman, an influential American journalist who had earlier been research director for President Woodrow Wilson’s Great War board, provided a personal link to the coming international order.
Proceedings at the Colloquium incorporated the same thinking that Keynes did in rejecting 19th-century laissez faire ideas. Their objective was not primarily to limit the state, but to rethink the type of state necessary for safeguarding the market from collapse. Many at the Colloquium recognised that the self-regulating market was a myth, and they knew from bitter experience that self-correcting capitalism did not work. The economy therefore needed support from the state. Endorsing an economic role for the state beyond that of the metaphorical ‘night watchman’ was part of neoliberal thinking right from its inception.
Today’s narrative fiction that globalist neoliberalism is ‘anti-state’ could selectively draw upon proceedings at the Colloquium. Some participants strongly critiqued what was called the ‘illusion of control’. While neoliberals wanted the state to preserve capitalism, they vehemently rejected state-socialist proposals for the ‘overhead control’ of the economy by ‘intelligent authority’. They repudiated such ideas as both naive and damaging. Instead, the neoliberals saw the economy as driven by millions of individual responses to prices. It was far too complex for any economist, or any central authority, to capture, comprehend and therefore control.
We should note this emphasis on ‘complexity’ even before 1939, as the theme is prominent in today’s globalisation theories. The prewar discussion undercuts those contemporary globalists who claim that complexity is a relatively new arrival, resulting from our globalised, fast-moving world, and, as such, it necessitates rethinking democracy because this form of governance was only feasible in the simpler times before the 1980s. Yet, as we see here, the idea of complexity has long been used to justify the limiting of democratic practices.
In the 1930s, the conclusion the neoliberals drew was that although the economy is too complex to be controlled, it could at least be ordered. This ordering would not just cement international cooperation, but also help curb the destabilising tendencies of capitalism and prevent capitalist breakdown. Hence the yearning for rules to encase capitalism. They argued that in order for the market to be able to exert its discipline, it needed to be protected by an ‘extra-economic framework’ in the form of a legal, constitutional, regulatory structure.
After 1945, the USA’s greatest economic success was leading the revival of international capitalism from the rubble of depression and war. The IMF and the IBRD began the process of restructuring capitalism in Western Europe and Japan. Under the additional pressures from the unfolding Cold War, the US went on to take direct responsibility for accelerating the rebuilding of Western capitalism.
Japan was reconstructed under effective American occupation, led by General Douglas MacArthur. For European revival, the US took the lead with the Marshall Plan launched in 1947. As these interventions by the American nation state illustrate, international economic activities were not undertaken to the exclusion of the national state. Far from it. The international organisations and nation states worked in tandem. Decisions made at a supranational level relied upon national states for their implementation, individually or in collaboration.
This relationship between the state and international liberal capitalism is captured well by the term ‘embedded liberalism’. This was the phrase coined in the early 1980s by the political scientist John Ruggie to describe the international expression of the Keynesian mixed economy. Postwar national governments working within these international bodies were not discouraged from acting. On the contrary, they were required to act.
Indeed, they were expected to take much greater state responsibility for market stability and economic growth. For instance, nations that signed up to the Bretton Woods system committed to following the new multilateral rules of fixed but adjustable exchange rates. This was in addition to aiding their own economies through domestic state interventionism. Initially, the new international regime openly reconciled multilateralist economic initiatives with national state intervention (8). In contrast to the contemporary globalist belittling of the nation state, international and nation-state intervention were then not seen as opposites.
3) Controlling the masses
The third motivating concern behind globalism is a distrust of the masses. The political elites of Western Europe and America left the Second World War determined to avoid the unsettling social unrest of the interwar years. The almost immediate passage into Cold War ensured this anxious memory remained highly relevant. Concerns about class conflict were a heavy influence, not just on the extension of domestic welfare statism, but also for the establishment of the new international regime.
Globalists see ‘order’ of some type as required to contain the inherent unreliability and rancour within the populace. They interpret history as implying that ordinary people prefer authoritarian order and security to freedom and democracy. They conclude that it was the absence of international order in the interwar years that allowed the rise to power of Mussolini, Hitler, Franco and Stalin. Perhaps, wrote foreign-policy scholar Robert Kagan, if the US had done in 1919 what it did in 1945 – establishing a liberal world order – we might never have known the Hitler of our history books (9).
Neoliberal globalists like Hayek did not differ from Keynesians over levels of state intervention. Rather, their opposition came from associating Keynesian state policies with socialism and the unruly masses. They identified the postwar mixed economy as a variant of the state socialism they hated. Far from denying state activism in principle, neoliberals were much more concerned about the influence of Marxism and the Soviet Union, as well as the National Socialist fascism from which many of them had fled. It was their rejection of these forms of state control that reinforced their scepticism about democracy, and for some stoked their outright hostility to mass democracy.
American political theorist Wendy Brown suggested that the original neoliberals from the interwar years were not subjectively anti-democratic. But their emphasis on keeping politics separate from economics spread to keeping politics insulated from the ‘emotional demands of the uneducated masses’ (10).
As another account of the workings of political decision-making in postwar Europe explains:
‘Insulation from popular pressures and, more broadly, a deep distrust of popular sovereignty, underlay not just the beginnings of European integration, but the political reconstruction of Western Europe after 1945 in general… the “postwar constitutional settlement” was all about distancing European polities from ideals of parliamentary sovereignty and delegating power to unelected bodies, such as constitutional courts, or to the administrative state as such.’ (11)
A technocratic, anti-political approach to postwar international coordination suited the US agenda, too. Instead of a ‘league’ based on a presumed shared faith in civilised values held by people, the US emphasised the benefits of collective scientific and technical expertise. Building upon and expanding the work of the League of Nations’ apparatus of technical services, the Americans sought a permanent postwar rules-based machinery. This went far beyond security into areas of economic, welfare and social affairs.
At least in the Anglo-American discussions, the new organisations established retained an idealistic motivation of serving democracy. However, it was evident from the start that smaller nations, and the demos in general, would actually have little say in how they operated. All members of the UN were expected to obey decisions of the Security Council, which was dominated by the big five (the US, the UK, the Soviet Union, China and France). Under the UN’s Article 2, even non-members were expected to do the same.
At the same time, the use of the term ‘democracy’ often had a self-serving meaning for the dominant powers. According to the postwar British government, colonialism was justified as a ‘practical illustration of democracy under tuition’. Contrary to the notion that the new UN promoted universal self-determination, its charter avoided any clear commitment to full independence of colonies. Instead, the charter merely committed the colonial powers to promote ‘to the utmost’ the interests and wellbeing of the inhabitants of these colonies, now rebranded ‘non-self-governing territories’.
The US political elite, which talked of its ‘evolutionary’ approach to self-determination, also retained a highly qualified appreciation of democracy. In the 1950s President Eisenhower’s secretary of state, John Foster Dulles, explained that the US supported national political independence only when a country’s people had proven themselves ‘civilised’ enough. They needed to be ‘capable’ of sustaining independence and discharging national responsibilities in accordance with the ‘accepted standards of civilised nations’. What was ‘acceptable’ was defined by the US government at the time, not by the people in those countries.
This top-down anti-democratic approach was well illustrated at an agenda-setting US conference in 1958 on Africa’s development needs. There was not one African present. The organisers simply assumed that Africans would be poorly educated and likely to be partisan and narrow-minded, unlike the scientifically motivated Western experts attending.
Unearthed by Slobodian’s research, Tumlir was even more explicit in his anxieties about the masses. He said the international economic order was ‘protecting the world market’ from popular pressures. While still chief economist at GATT, he explained that whenever you have democracy, you also have the possibility that the masses can capture the state. The state then ‘ceases to be a government and becomes an arena for gladiatorial combats of organised interests’. A big risk with democracy, he concluded, is that it can lead to socialism (12).
The constitutional problem, Tumlir wrote, was that democratic governments could act against the vital interests of their own societies. Hence, a formal constitution is needed to ‘structure’ or ‘constrain’ political discussion. The World Bank has subsequently drawn attention to what it described as the ‘inherent dangers’ of greater openness and participation. Expanded opportunities for public participation are seen as increasing the demands made on the state. This, the Bank wrote, can increase the risk of gridlock or of state capture by vocal interest groups.
Tumlir laconically summed up the rationale for rules-based systems: ‘international rules protect the world market against governments’ (13). The rules as established by international elites apparently recognise the interests of a national society better than its own people can. Rules do not only put shackles on what governments can do — they also justify the refusal to engage in political debate with their people.
The World Bank similarly drew attention to a role for international institutions as a mechanism for making external commitments when national governments undertake internal, and potentially unpopular, changes. These outside commitments make it more difficult for governments to backtrack on domestic reforms in the face of popular opposition.
Rules and democracy therefore don’t mix well. Rules are used to back up the insistence that there is no alternative (TINA). There is no value in even discussing alternatives because we have rules to follow. Tumlir also explained that international rules could help save national politicians from internal pressures: ‘The international economic order [could act] as an additional means of entrenchment protecting national sovereignty against internal erosion.’ In this Orwellian formulation ‘protecting national sovereignty’ implies its opposite. It instead means protecting the national political establishment from the wishes of a nation’s people.
With a more extensive institutionalised order, national politicians are able to defer to the interests of the world economy, or to ‘globalisation’, or to the EU or to the rules of the WTO to validate their actions or inactions. It is convenient for national leaders to have a supranational master to whom they can point their electorate, and shrug: ‘We had to do it, there wasn’t an alternative.’
For instance during the eurozone debt crisis in 2015, a majority of Greek voters rejected the terms of the bailout agreement drawn up in Brussels and Berlin. In response, the German finance minister Wolfgang Schaeuble succinctly summed up the globalist outlook: ‘Elections change nothing. There are rules.’
It is not coincidental that Hayek’s rejection of ‘minimal statism’ in Law, Legislation and Liberty came alongside a sustained critique of democracy. Specifically, Hayek criticised what he called the ‘unlimited, unrestrained’ representative democracy that led to stupid and damaging economic policies. This conclusion rested on his denial of the possibility of economic control, which led to another denial: people cannot be masters of their own fate.
Hayek was representative of neoliberal globalism when he determined that restricting political freedoms, including democratic rights, was sometimes necessary to preserve economic freedom. While Hayek thought that ‘democracy needs the broom of strong governments’, he thought democracies could allow governments ‘too much power’. This is why he explained he was always very careful to distinguish between ‘limited democracies’ and ‘unlimited democracies’. And his preference was for the limited variety.
This is why throughout his lifetime, and especially after 1945, Hayek and other neoliberal globalists put increasing faith in the law – both national and supranational. Hayek distinguished the positive role ‘law’ must play from the dangers of a ‘legislative state’. He therefore recoiled from the expansion of democracy around the world because it enabled the potential for economic intervention through legislation. This he saw as corrosive to the preferred separation of economics from politics.
It is now widely accepted, especially among Europeans, that supranational law can override national law within domestic courts. The high-profile operations of the EU’s European Court of Justice illustrate this. But this anti-democratic tendency does not mean globalists are always dismissive of the domestic courts. On the contrary, many recognise that domestic courts have the advantage over international ones of a greater semblance of legitimacy. In practice, domestic judges are also believed to be more reliable than democratic governments for enforcing international law. This indicates that for globalists the denigration of the political by the law assumes even greater importance than the promotion of the supranational per se.
This type of thinking confirms that the globalist scepticism towards the nation state is to a great extent driven by anxieties over its democratic content, rather than over its mass political aspects. Globalists fear the nation state only insofar as it is a mechanism for democratic power. The globalist denial of the effectiveness of national state policies is mostly a denial of the acceptance of democratic politics.
The globalist and neoliberal attack on nationalism and sovereignty is really an attack on the ‘unlimited’ power of the people, of which Hayek was so critical. Complementing their combined fears of a return of international conflict and of economic breakdown, what worries our globalist, often neoliberal elite most on a day-to-day level is popular democracy. They baulk at the notion of people intruding into their technocratic practices and procedures.
Motivated by those three concerns – international conflict, capitalist collapse, and the distrust of people – globalists are pragmatic, often fervent, about using state institutions to maintain and stabilise capitalist economic relations. The ‘liberal’ rules of the international financial regime were constructed more to build the capacity of international organisations, not to limit the interventions of individual governments. Globalists are happy running not just international institutions but national ones, too, as long as they can build in protection from democratic accountability.
Globalists and neoliberals will still today repeatedly recite their belief in the ‘free market’ and in ‘free trade’. But the freedom that really motivates them is not freedom from state intervention. It is freedom from the intrusion of politics. In the end this comes down to freedom from being answerable to the people. The triple goals of protecting capitalism from war, from breakdown, and from popular intrusion, and ultimately from popular insurrection, is what necessitates the globalist desire to curb the potentially disruptive effects on market processes of national democracy.
The synthesis of those three fears accounts for the anti-political core of neoliberal globalism. Slobodian appropriately describes neoliberalism as less a theory of the market, or of economics, than of law and the state. Neoliberal-informed globalism is much more a political project than it is an economic one. Hayek’s most important contribution to globalism was not his romantic attachment to the free market. It was his arguments about what he called the ‘dethronement of politics’. The irony is that the neoliberal goal of ‘depoliticising the economy’ is itself a political programme.
It ultimately finds expression in trying to shield capitalism from democratic influences. As early as 1932, Eucken, the father of German Ordoliberalismus, had openly denounced what he called the ‘democratisation of the world’, referring to the masses coming into politics through ‘universal’ (although, then, mostly male) suffrage. Almost exactly 50 years later, after visiting Pinochet’s Chile, Hayek was equally explicit about his contempt for democracy. In an interview with the Chilean newspaper, El Mercurio, he said he was ‘totally against dictatorships’ as long-term institutions, ‘but… at times it is necessary for a country to have, for a time, some form… of dictatorial power’. ‘Personally’, he continued, ‘I prefer a liberal dictator to democratic government lacking liberalism’ (14). This summed up the globalist philosophy that you cannot have political freedom without economic freedom, but economic freedom is okay without political freedom.
A quarter-century later, in 2015, Jean-Claude Juncker, president of the European Commission, expressed the same authoritarian message: ‘There can be no democratic choice against the European treaties.’ (15) This was no slip of the tongue. A few years earlier, when leading the Eurogroup of finance ministers, Juncker explained, ‘Monetary policy is a serious issue. We should discuss this in secret.’ He went on to acknowledge, ‘I’m ready to be insulted as being insufficiently democratic but I want to be serious… I am for secret, dark debates’. It is not such a long step from Hayek supporting General Pinochet’s Chilean dictatorship in the 1980s to the anti-democratic impulses of the EU bureaucracy in the 21st century.
(1) Globalists: The End of Empire and the Birth of Neoliberalism, by Quinn Slobodian, Harvard University Press, 2018, p111
(2) ‘Authoritarian Liberalism: From Schmitt via Ordoliberalism to the Euro’, by Werner Bonefeld, Critical Sociology, Vol 43, issue 4-5, July 2017
(3), ‘Strong and Weak Elements in the Concept of European Integration’, by Jan Tumlir, included in Reflections on a Troubled World Economy: Essays in Honour of Herbert Giersch, edited by Fritz Machlup, Gerhard Fels and Hubertus Muller-Groeling, St Martin’s Press, 1983, p36
(4) As Ian Kershaw’s Hitler, 1889-1936: Hubris shows, there were in fact specific anti-democratic circumstances leading up to the March 1933 elections.
(5) The Emergence of Globalism: Visions of World Order in Britain and the United States, 1939-1950, by Or Rosenboim, Princeton University Press, 2017
(6) ‘The joint-decision trap: Lessons from German federalism and European integration’, by Fritz Scharpf, Public Administration, Vol 66, no 3, 1988, p 240
(7) Preamble to the UN Charter
(8) ‘International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order’, by John Ruggie, International Organization, Vol 36, no 2, Spring, 1982, p393
(9) The Jungle Grows Back: America and Our Imperiled World, by Robert Kagan, Alfred A Knopf, 2018, pp144-5
(10) ‘Who is not a neoliberal today?’, by Wendy Brown, Tocqueville 21 interview, 18 January 2018
(11) ‘Beyond Militant Democracy’, by J-W Muller, New Left Review, 73, 2012
(12) Globalists: The End of Empire and the Birth of Neoliberalism, by Quinn Slobodian, Harvard University Press, 2018, pp 251-2
(13) ‘International Economic Order and Democratic Constitutionalism’, by Jan Tumlir, Ordo, 34, 1983, pp72, 77
(14) ‘Friedrich Hayek: An interview’, El Mercurio, 12 April 1981
(15) Translated from ‘Pas question de supprimer la dette Grecque’, Le Figaro, 28 January 2015