Tapping into the unrealized futures of the past: QUINN SLOBODIAN with Pavlos Roufos

Quinn Slobodian’s recent book Globalists: The End of Empire and the Birth of Neoliberalism (Harvard University Press, 2018) is a brilliant exposition of the widely contested concept of “neoliberalism.” Slobodian situates the concept in its historical context, urging a reconsideration of the term on both those who reject its significance and those who continue to misuse it. I met Quinn in Berlin this July for a conversation concerning neoliberalism, its contemporary populist offshoots, and other current developments.


Pavlos Roufos (Rail): You have made the argument that the often-repeated narrative that pits contemporary populists against so-called “globalist neoliberals” is historically inaccurate. Right-wing populism is neither exploiting anti-immigration/anti-Islamist tendencies in order to hide its essentially neoliberal agenda (as some on the Left argue), nor is social conservatism at odds with neoliberal policy (as some “globalists” would claim). Perhaps to situate your position properly, it would make sense to start with your definition of “neoliberalism.”

Quinn Slobodian: The way I understand neoliberalism comes from the work of the people who called themselves neoliberal. The term itself was coined in 1938, by a group of economists, journalists, and politicians who gathered in Paris, people like Friedrich Hayek, Ludwig von Mises, Wilhelm Röpke, Walter Lippmann, Louis Rougier, and others. They were looking at the Great Depression and asking themselves: how can capitalism survive despite its internal tendency to self-destruct? And they were quite clear that if you simply let capitalist interests govern by themselves, there will eventually be a counter-reaction and a mobilized population would overthrow capitalism. A fully unregulated and a fully untamed capitalism would lead to an opposition which would inevitably be communist or socialist. Thus, they realized that it was necessary to think anew about the state, in a way that would protect capitalism from the threat of overthrow by the masses. For capitalism to survive, they concluded, it needed a strong state.

This group of people assembled again after the Second World War to form the Mont Pèlerin Society. By following this group, you can see an evolving set of conversations which, from the 1930s to the 1990s, revolved around designing institutions that would constrain sovereign nation-states from doing things that were outside of the interest of the reproduction of the capitalist world economy. If you think about the way that nation-states were embedded in new institutions such as GATT (which became, in 1995, the WTO), the IMF, the European Union, you see that these were institutions with many purposes, but one of their most important ones was to prevent the subversion of capitalist exchange between nation-states.

The 1990s looked like an absolute triumph of the neoliberal project. Within a couple of years, you had the Eurozone, NAFTA, the WTO. After the end of the Cold War, it looked like a complete victory for a vision of capitalism which sees the free movement of goods and money as basic values that humans need to protect. And yet, at that very moment in the 1990s, when it looked like neoliberalism had defeated all its opponents and the supranational institutions to protect capitalism had been perfected, some of these neoliberals themselves (e.g. particular group of actors around the Mont Pèlerin Society, including a still living Hayek (he died in 1992), Ralph Harris, Pascal Salin, Antonio Martino, Roland Vaubel, Gerard Radnitzky, and others), started to worry that these very institutions were going to become a new means for taking socialism to the next level.

Rather than the hoped-for neoliberal Europe, Europe appeared to the neoliberals themselves as a “Social Europe,” under the leadership of Jacques Delors. There was a fear that the French would effectively take over. Instead of controlling social demands, the EU would start catering to social demands through transfers and structural funds etc. Thus, at that very moment, some key neoliberals started to say that these supranational institutions are not trustworthy guardians of the economic constitution and that we actually need to rethink the basis for protecting capitalism. In this context, the nation-state began to be seen as ultimately more trustworthy than something larger like the EU, the WTO, or NAFTA. So there was a return to the nation by so-called far right populist parties like the Austrian Freedom Party (FPÖ) and others.

Rail: To many, it is clear that there is a natural bond between neoliberalism and the state. In typical left-wing discourse, however, neoliberals are seen as against the state. 

Slobodian: I don’t know why that is the case. One often hears this argument, made in a sophisticated or less sophisticated manner, namely that neoliberalism is “anti-statist.” But the best way to overcome this misconception is by reading anything written by actual neoliberals. And one will see then that it is explicitly a project about redesigning the state. It is finding, as one scholar put it, a “better shell” for capitalism. Hayek is often used as a prime example for this misconception, but if you look at his books, you will see that he wrote a book called The Constitution of Liberty (1960), which is concerned with designing a constitution for a new state, and the “Law, Legislation, Liberty” trilogy, which provides very clear guidelines on how to design a state, and so on.

The question is one of tweaking, fixing, and modifying what will be the best container for accommodating democracy, without however letting democracy overtake the prime directive, which is the survival of capitalism. From the point of view of the neoliberals, the 1990s represent a classic moment of a crisis of the state.

Rail: Would you trace the trajectory of the far right AfD (Alternative for Germany), which has experienced recent electoral success, along a similar path?

Slobodian: Indeed. Some of the neoliberals rediscovering the nation, including here in Germany, started to take a very public oppositional stance to the introduction of the Euro in the 1990s. The AfD began as an anti-Euro party. And that mobilization started already in the mid-1990s, when there were small splinter parties, including Bund freier Bürger for example, allied with economic professors, such as Joachim Starbatty (later a member of the Mont Pelerin Society), who lodged a constitutional complaint in Karlsruhe against the introduction of the Euro. There is the real sense among some neoliberals that Europe is the problem not the solution, that the Euro (the currency) is going to be taken over by left-leaning central bankers (from France in particular), and thus it won’t be a means of imposing austerity. So, there is a recovery of nationalism as a positive force.

The critique comes from the monetary perspective first, but in parallel you see the argument that for monetary sovereignty to work, you need a certain set of cultural qualities and virtues. And this is joined by the proposal that perhaps such virtues are only rooted in certain people, that Germans might not have a monopoly on these virtues, but certainly a strong inventory of such virtues as prudence, long-term thinking, and discipline. So a highly dubious cultural anthropology and psychology becomes a complement to the monetary policy perspective.

Having said that, though, one must add that the AfD announced a new program at the end of June 2018 in which they have explicitly distanced themselves from a lot of clearly neoliberal policies that were part of the previous program. Their current tactic is to focus even more on personalized attacks on the supposed criminality of migrants, call for accelerated deportation procedures while emphasizing the need for measures to support the social state. Whether this is a long-term position remains to be seen. Their continued calls for fiscal discipline and budget-cutting while also opposing new taxes suggests that, should they gain a measure of power, many of the “social” promises would be sacrificed. However, other right-wing nationalist parties with neoliberal roots (the Front National in France, for example) have transformed over time into more national “social” formations so this is not out of the question.

Rail: How would you explain this “cultural turn” that some economists took at the time?

Slobodian: In a sense, the newly nationally-minded neoliberals were following the trend of the time. Accelerated by the end of communism, you have the emergence of comparative economic systems as a field within economics. A lot of economists were asking what the necessary cultural conditions were for responsible activity within the market. Maybe the most famous of these is Douglass North, who won the Nobel Prize in economic sciences in 1993. He pioneered what was called the New institutional economics, which asked the question: why does capitalism seem to function better in some parts of the world than others, and in some periods of history rather than others? What were the secrets of economic success in Western Europe and later North America? Quite often these people were historians, so they went back to the Middle Ages and further to ask how institutions such as the rule of law, forms of contract and exchange have developed over the centuries. Their conclusions tended to be that institutions take a very long time to develop and it’s quite hard to “import” one way of organizing an economy into the Soviet Union or Botswana or wherever from one day to the next. This perspective fit well with a larger pessimism about development economics, a pessimism about the post-communist transition, and a return to the idea that economic changes must happen very slowly. It put the spotlight back on culture as the key to prosperity or poverty—some societies have the right culture, some do not. The neoliberal intellectuals who began to be skeptical about European integration and multilateral institutions like the WTO expressed the view that certain cultures may be more hardwired to follow economic rules and rationality than others. They turned the insights of New institutional economics to the political right to support the necessity of the nation and the futility of both foreign aid to the Global South and attempts to integrate cultures they saw as very different such as Northern and Southern Europe under the single currency of the Euro.

Rail: Would you use a similar approach to explain Trump or Brexit?

Slobodian: One can indeed make the argument I have made about the rise of the AfD or the FPÖ to locate the intellectual origins of Brexit. Margaret Thatcher gave a famous speech in Bruges in 1988, in which she said that “we have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed again at a European level with a European super-state exercising a new dominance from Brussels.” Immediately after that, Ralph Harris, who was the general director of the Institute of Economic Affairs [1957-1988] (the first neoliberal think tank), started the Bruges Group, which became the first Eurosceptic think tank. In turn, this spawned the Centre for the New Europe, based in Brussels. These were exclusively run by Mont Pèlerin Society neoliberals. And they feared exactly the same thing as those neoliberals who started these small Eurosceptic parties in the 1990s, namely that Europe was taking a wrong turn toward greater redistribution from richer to poorer countries, centralized control, and social transfers.

The first person to argue that the right to secession must be added to the Maastricht Treaty of the E.U. was James M. Buchanan, the Nobel Prize-winning economist from the US. Through the 1990s, neoliberals gathered around something called the European Constitutional Group here in Berlin which was consistently arguing for the same thing. By the late ‘90s, people in this group were in fact starting to say that the EU should dissolve—not only the Euro should go, but the European Union itself. It is hard to explain why they would think that it had been taken over by socialists, but that is what they believed. The Institute of Economic Affairs in London ran a lead editorial three months before Brexit claiming that “Hayek would have been a Brexiteer.” Nigel Farage of the UKIP was also involved with the Bruges Group, publishing a paper with them in 2001 condemning the “People’s Republic of Europe.” Today, the Bruges Group website boasts that it “spearheaded the intellectual battle to win a vote to leave the European Union.”

If you look at the explicit program of the Brexiteers, it was not economic isolationism, nor was it really economic nationalism. It was a turn away from the regulated European market back to a global market; this is what was meant with all the talk about global Britain.

Rail: This sounds very true about Brexit, but could one say something similar about Trump?

Slobodian: I see them as very different. I think Brexit falls quite easily into the model of “neoliberalism’s populist bastards,” as I have called the phenomenon elsewhere, especially because its leading lights share a similar approach, which is “free movement of capital: yes; free movement of goods: yes; free movement of people: no.” It is the same distinguishing feature of the AfD. Trump is different.

The easiest way to talk about Trump’s trade policy is not to look at Trump but at his trade representative, who has a great deal of power. His name is Robert Lighthizer. He has not been discussed much, even though I think he is interesting, partially because he has been in the world of Washington since the late 1970s. He was the Deputy US Trade Representative for Reagan in the 1980s. That’s significant because in the mid-1980s, Reagan was doing many of the same things to Japan that Trump is doing to China. At the time, it was called “aggressive unilateralism,” which meant—to simplify greatly—that the US was saying, for example, “please don’t export so many cars to the US,” demanding something called Voluntary export restraints. And Japan agreed to keep America happy by not exporting so many cars. Similarly, the US used so-called Section 301 cases, by deeming this or that trade unfair, and therefore using executive authority, which went over GATT, to protect American products. So you don’t have to go back to the 1930s to find America acting the way Trump is acting, they were acting this way in the 1980s under Reagan. That’s the first thing to note.

The second thing to note is that Trump is using a policy of both/and, not a policy of either/or. On the same day that you see him question the WTO as an institution, his own administration will file a suit with the WTO. So the idea that he is rejecting the institution outright is simply not true. He is using it to his own advantage, while questioning its legitimacy. That said, I would still put him in a different category from the neoliberal populist parties in Europe. The fact that the US is as large as it is means you have the space for a type of anti-status quo policies that you don’t have in other countries. So the erratic-ness of Trump is kind of permitted, not only because it is based on the fact that the US economy is at least superficially doing so well at the moment, something that has given him a lot of freedom for disruptive economic policy making. It is also based on the reliance of a country like China on the US, which means that they will take a lot of abuse before it will become a real problem. You see that now. At a recent meeting of China with European representatives, the Chinese argued effectively “maybe America is right, we should reform the WTO, we should include more intellectual property rights.” Reagan used tough action against Japan to turn the GATT into the WTO, which was good for America then. It is likely that Trump is using this tough action against China now to get a new WTO that will also be good for the US. In this case we don’t get a destruction of the international system, we just get (no surprise) a reform of the international system to favor US economic interests.

Rail: Some people have argued that his trade war policy is not so insane, if one looks at it from the perspective of a pre-emptive move towards an inevitable or expected development. If America is gradually losing its hegemonic power in the world global order and China is rising up to take its place, it has been argued, what Trump and his administration are trying to do is to pre-emptively prepare the US for a situation beyond its control. 

Slobodian: I think that is certainly the way someone like Lighthizer sees it. He was there for the fight with Japan, and Japan surrendered, because Japan is not big enough to be its own self-contained economy at any level, it can’t build its own demand for its own products. Whereas China can. And that’s the fear that China produced in the minds of some US policymakers with its vision for “Made in China 2025.” And absolutely this is a point where, at some realist level, it makes sense to be as aggressive as the American administration is being now, because they don’t want China to run down that road—this is an attempt at containment. They are trying to intertwine Chinese and American production by bringing, for example, a company that usually operates in China, Foxconn, to Wisconsin. If you can bring the production chains back to the US, then maybe you create a kind of interdependence that is hard to avoid. That is the greatest irony: using this aggressive economic nationalism to actually produce a greater interdependence.

In this context, it is probably wise to keep the whole discussion on Trump separate from a discussion of the intellectual lineages of neoliberalism because I do think that he is operating in a different conceptual space. With Trump, one must always keep in mind the mode of negotiation, which is how he sees the world. In negotiation, there is space for exaggerated acts of threat, retaliation, even the threat of withdrawing from NATO. If he has any coherent view, it is that you can bully people into better terms for your interests. And Trump is bullying everyone. But if one compares this to how neoliberal intellectuals have understood economic policy, at least within their own terms, this looks quite different. Rather than negotiation, the avowed neoliberal goal has always been “depoliticization.” Trump, in contrast, is using a tactic of politicization. He is saying that all economic decisions are political, that there is no objective thing called “the world economy” or “globalization” forcing us to do this or that. His argument is that America has certain interests and America will overrule what “the world economy” says. He is inserting politics back into political economy in a way that is at odds with the main line of the global neoliberal project.

And this represents a curious convergence with critiques from the left. People from the left have also been saying for decades that we need to put politics back into political economy. They too have been saying that there is no such thing as depoliticization, everything that looks apolitical is always political, etc. This is an essential point. In 2016 the US was at a crossroads: either we would get politics put back into political economy through the Bernie Sanders way of looking at it, or through the Donald Trump way of looking at it. Both of them were repoliticizing the economy—with different assumptions—of course, about social goals, human nature, the good life, etc. That is the challenge now, if one wants to look at it intellectually or politically. Now that depoliticization has been successfully called into question, and I think that actually it has been (through Trump, unfortunately), at the same moment it is creating an opening where if you have different politics from Trump, then it’s a time to convincingly present a different way of thinking about politics. The reference to Gramsci’s idea of the crisis as interregnum is overused but still helpful in getting to the peculiar feeling of the present moment: an old order is dying but a new one cannot yet be born.

Rail: The reference to the convergence between left and right is an interesting point. In a certain way, the idea that the state should position itself in such a way so as to protect its citizens from the abstract forces of the economy was a key argument of the left in the past. It informed an important part of the anti-globalization movement and its calls for enhanced national sovereignty against speculative finance etc. This space appears now to have been taken over by the right, who added a tougher and more determined position on the question of migration. But it would be hard to miss that, in the last few years, there has been a significant move of the official left (I’m thinking here of Corbyn in the UK or Aufstehen in Germany) towards migration controls and what you recently called “welfare chauvinism.” I see that as a logical consequence of regaining national sovereignty. Would you agree?

Slobodian: It is fair to point out the gap between the social-democratic claim to cosmopolitanism and multiracialism and multiculturalism, on the one hand, and the practice of being quite hard on border security, on the other. Obama, known with some justification as the “deporter-in-chief,” is the prime example. More important than migration policy is the question of the people who are already here. In the case of the right wing in Germany, the fear is more migration of course, but the already existing non-ethnic Germans are also seen as a threat to German prosperity and survival. One of the primary intellectual inspirations for much of the new German right-wing resurgence, Thilo Sarrazin, says “Yes, cut migration from certain countries but the people from Muslim majority countries who are already here are also producing a crisis for the welfare state.” Here, there is a clear difference between the social-democratic position and a right-wing position. The former group argues that the already existing multicultural population must not be seen as a threat to the stability but as an asset, that tolerance should be seen as a virtue, etc. The argument is made not only because it is morally, abstractly good to be this way but even in terms of economics—Germany needs workers, America has an aging white population etc. So despite internal hypocrisy and contradictions, I still think the two positions need to be seen as distinct in a meaningful way.

Rail: Do you see any connection between this discussion and the so-called Keynesian re-emergence? What do these ideological developments tell us about future possibilities?

Slobodian: Clearly, the liberal Keynesian order embedded after 1945 was not about de-globalization or opting out of the world economy, it was about capital controls. The biggest difference between then and now is capital controls. The Bretton Woods order was built on the principle of free trade regulated through international institutions, as it is now. In terms of migration, it was basically the same way it is now, i.e. nations had the right to set their own migration policy. The biggest difference concerned hot money flows and the constant movement of capital over borders, then considered something potentially damaging for the economy that should be prevented. And that’s of course what the IMF was set up to do: to regulate a financial order premised on the idea of capital controls. That changed in the 1970s. And that produced the different world we live in now. So, the question is: can you put the genie back in the bottle? The system of capital controls did not break down only because of the change in ideology of the people who were running the IMF, but also because people were getting better at getting money out of countries, setting up offshore accounts, lending in Eurodollar markets, etc. So the argument (which is, of course, contestable) against returning to capital controls is: “it is impossible.” People will figure out ways to get money out. Financial flows are too great now.

In part, the neoliberal argument is that the Keynesian model could not figure out how to manage economies when money could so easily cross borders. This is an argument that people who are more in the world of economics often make, and people who are more in the world of cultural history and political history don’t often confront. In other words, the economists’ argument is that “the left did not have a solution in the 1970s.” It was not just that everyone decided that they were neoliberal now, it was that existing policies were failing massively and the new ones (at great cost) were able to stabilize the crisis, by producing a manageable crisis. 

In terms of options for the present, one can and should certainly talk about managed globalization. While being aware of its fundamental centrism and resistance to transformative political economy, it is still worth discussing the Thomas Piketty position, that one can bring offshore money under control, one can put small financial taxes on financial transactions, one can record the cross-border activity that is happening, without de-linking and “returning to the 1930s.” That’s a modest proposal for the social-democratic left, but it would definitely be a starting point. Right now it seems like modest progress would be like a blessing compared to all the rapid decline that we are watching.

Rail: It is true that there is a sense of underlying panic. But one can say that if Keynesianism was unable to deliver on its promises and was replaced by a system more able to facilitate free trade at a global level, what we see now is that this very system is going through a critical moment. But no alternative has emerged yet. Some are set on maintaining the system as it is, while others are experimenting with new directions, and perhaps this is what we are seeing with the populist right, Trump, etc at the moment. 

Slobodian: I think you are right. There is catastrophism around—the sense that every day might bring a new crisis. This, of course, resembles reality television, where Trump comes from. It is politics as high-stakes entertainment. You see it even more in the UK, where people follow day to day activities in the parliament minutely, tracking who resigned today and who will propose what tomorrow, etc. If you are a young British person, or even an old British person, the micro-decisions around Brexit will have a major effect on your future. They may affect who you will be able to be in love with, whether you can continue working where you work, what your retirement is going to look like.

The danger of being plunged into this short-term panic is that we can lose sight of the question: what is the grandest possible level at which we are hoping for progress? And that is one of the things that made the year 2016 such a whiplash. The Bernie Sanders campaign was speaking in these extremely large terms. Say what you will about feasibility, the imagination about the way America could be transformed was actually enormous. And from there, from this grand dreamlike aspiration, we have been plunged into the constant panic of moment-to-moment news. And it is politically essential to be able to take a step back from that moment-to-moment treadmill and think in larger terms. And that means you need to think historically. You need to see what traditions we can be inspired by, what are the goals and values that mean something to us when we look back at the last hundred or two hundred years of history. And what could inspire a new movement. And that’s only the very beginning, obviously, but I think that grand talk has a purpose. We are confronted not just with a problem of fine-tuning a better technocracy (though that will be essential), but also with tapping reservoirs of political imagination and rediscovering the last century’s unrealized futures.

Contributor

Pavlos Roufos

Pavlos Roufos lives and writes in Berlin. His book, A Happy Future is a Thing of the Past, was published this year by Reaktion.

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