Nine Lives of Neoliberalism

Dieter Plehwe, Quinn Slobodian, Philip Mirowski, Dieter Plehwe, Quinn Slobodian, Philip Mirowski

• Publisher: Verso
• Year: 2020
• Print ISBN:
  9781788732536
• eBook ISBN:
  9781788732543
• Topic: Economics
• Subtopic: Economic Policy
• Index: Economics

Neoliberalism is dead. Again. After the election of Trump and the victory of Brexit in 2016, many diagnosed the demise of the ideology of Margaret Thatcher, Ronald Reagan, Augusto Pinochet, and the WTO. Yet the philosophy of the free market and the strong state has an uncanny capacity to survive and even thrive in crisis. Understanding neoliberalism's longevity and its latest permutation requires a more detailed understanding of its origins and its varieties. This volume breaks with the caricature of neoliberalism as a simple belief in market fundamentalism and homo economicus to show how neoliberal thinkers perceived institutions from the family to the university, disagreed over issues from intellectual property rights and human behavior to social complexity and monetary order, and sought to win consent for their project through the creation of new honors, disciples, and networks. Far from a monolith, neoliberal thought is fractured and, occasionally, even at war with itself. We can begin by making sense of neoliberalism's nine lives by sorting out its own tangled histories.

PART ONE

NEOLIBERAL SCIENCE
BEYOND MARKET
FUNDAMENTALISM

1

Recoding Liberalism: Philosophy and
Sociology of Science against Planning

Martin Beddeleem

Our often unconscious views on the theory of knowledge and its central problems (“What can we know?,” “How certain is our knowledge?”) are decisive for our attitude towards ourselves and towards politics.

Karl Popper

In the wake of the global financial crisis, the resilience of contemporary neoliberalism confounded its detractors who expected its “zombie economics” and obsolete policy models to give way to new horizons of expectations. Usually, these predictions focused either on a superficial reading of the defeat of neoliberalism-qua-austerity or insisted that its systemic flaws had ruined any remnant of its legitimacy.¹ More skeptical authors remarked that, far from suffering from a sudden collapse, neoliberalism has never been more palpable than in times of crisis, when it reinvents itself by metabolizing the criticisms leveled at it or by entrenching its dominance over the policy debate.²

To be sure, neoliberalism owes its ideological fluidity and staying power to a hegemonic position among economic elites. Yet this puzzling continuity only becomes clearer once its epistemological fabric comes into view. Through recent decades, neoliberals have demonstrated an uncanny ability to forsake obsolete theories and models in order to produce seemingly fresh answers to the repeated crises they have encountered. Although the original agenda of neoliberalism has been revised many times over, its programmatic ambition and scientific reach have steadily increased. Commonly overlooked, this scientific dynamism, sponsored by private foundations, relayed by think tanks, and embedded within the “marketplace of ideas,” remains at the very heart of the neoliberal project today.

Since its inception, the problem space shared by neoliberals has been spread out on a modernist canvas, one which contrasted sharply with conservatives, reactionaries and old-fashioned liberals. During the inter-war period, self-proclaimed neoliberals dismantled and recoded the unpopular laissez-faire liberalism with epistemological ideas adapted from the “new scientific spirit” of the early twentieth century.³ Breaking with naturalism and empiricism, they espoused a research program inspired by mathematical and physical conventionalism, one that balanced a skeptical epistemology with a commitment to scientific progress and objectivity. To this end, methodological rules were pivotal to the reconstruction of a genuine science of liberalism which had fallen into disrepute. This agenda aimed at regaining the political ground lost to ‘collectivism’ in the twentieth century by tackling two sets of problems left aside by ‘classical’ liberals: the positive role of the state and the social question.

While laying this epistemological groundwork, neoliberals battled competing claims about the nature of science, its history, and its position in society by actively reshaping ideas about academic freedom, the discovery of knowledge, and their relationship with political institutions and social reform. Faced with the scientific and rationalist optimism of the unity of science movement as well as much of Marxism, early neoliberals demarcated and defended a liberal science against progressive scientists who promoted science as the midwife of social change. Crucially, they developed a new theory of knowledge-in-society which fused together philosophy of science and political economy into a single set of hypotheses. In these debates, concerns about the role of science in society linked up with the most pressing political question of the day: the rise of fascism and totalitarianism.

Neoliberalism was thus born out of a collision between the controversial importation of the methods and authority of the experimental sciences into politics on the one hand, and the acknowledgement of the social and political conditions for the discovery and justification of knowledge on the other. It made the pursuit of knowledge and truth a political question, and gave the question of social order an epistemological answer: what we can do depends ultimately on what we can know. Nevertheless, this proclivity for epistemological investigations did not imply a unity of views among neoliberals, nor that their conclusions were devoid of political motivations. Moreover, in their contention to reclaiming the mantle of science, neoliberals shared many premises with progressive scientists regarding the position and “function” of science in society. This apparent paradox explains both the fluidity of neoliberal thinking and the inspiration it has drawn from its detractors at a sociological and organizational level, two dimensions still relevant today in accounting for the steadiness of neoliberalism and its success in cannibalizing competing ideas.

The first part of this chapter situates the scientific controversies in which neoliberal philosophers of science developed their intuitions. The second part revisits the socialist calculation debate as the cradle of their epistemological arguments for the superiority of the market. The third part deals with their common fight against the planning of science and the reciprocal relation they established between liberal institutions and the conduct of science.

Vienna

The early twentieth-century breakthroughs in relativity theory, quantum mechanics, and non-Euclidean geometry had in common an encounter with phenomena from premises which were counterintuitive to a natural or rational picture of the world. Unshackling foundational axioms from fitting any “realist,” “naturalist” or “a priori” presuppositions unleashed extraordinary debates and ingenuity in the advancement of these disciplines. While scientists retreated from their pretension to describe the “real” world, their quest for new theories and assumptions, which combined methodological inventiveness and instrumental needs, became boundless.

Neoliberalism owes its scientific imagination to the strong contingent of philosophers of science who participated in its elaboration. Michael Polanyi, Alfred Schutz, Felix Kaufmann, Karl Popper, Ludwig von Mises, and F. A. Hayek, among others, were all refugees and exiles from Austria and Hungary who were immersed in the scientific world and volatile political situation of the interwar period. They unanimously perceived the dissolution of the Austro-Hungarian Empire as a disaster,⁴ responsible for the rise of an antagonistic politics pitting nationalism and conservatism against the growing communist movement. At that time, Vienna underwent one of the most radical municipal experiments of the twentieth century with the large-scale social policies promoted by the Austrian Socialist Party. In 1919, the philosopher and socialist educator Otto Neurath, president of the Central Planning Office in the shortlived Bavarian Soviet Republic, advocated a centrally planned economy in which money would be abolished and exchange would be made in kind. Before the war, Neurath had been a participant in the seminar led by Austrian economist Eugen von Böhm-Bawerk, along with Joseph Schumpeter, Otto Bauer, Emil Lederer, and Ludwig von Mises, who remembered him, in his words, for the “nonsense” he presented with “fanatical fervor.”⁵

The refutation of Neurath’s scheme published in 1920 by Mises triggered the Planwirtschaft (planned economy) debate in Vienna, wherein Mises argued that economic calculation was naive and unmanageable without the indispensable role of prices as signals of the relative value of factors of production. Against Neurath’s desire to institute a scientific management of the economy, Mises claimed that the complexity of the economic system made its apprehension in one mind or place so difficult as to be near impossible. The debate received considerable attention, in part because physics and economics had displaced theology as the main subjects for intellectual debate in Vienna. Within both disciplines, the Austrian scientific “culture of uncertainty” was unique in Europe: their embrace of probabilistic theory “was tied to a characteristically liberal and anticlerical rejection of absolute claims,”⁶ and “philosophers who challenged certitude often led efforts for social reform and popular scientific education.”⁷ As a matter of fact, Austrian Marxism itself was unique in drawing heavily on the ideas of Ernst Mach as it blended socialist economics with a positivist philosophy of science in the hope of attaining a truly scientific socialism. A rare fluidity existed, then, between the new discoveries of the physical sciences, their impact upon philosophical debates, and their translation into economic theories or social reforms.

Though Mises never held a formal appointment at the University of Vienna, his Privatseminar became the meeting place for a new generation of liberal economists—first among them Hayek—wherein the discussions ranged from sociology and psychology to logic and epistemology, with a strong interest in the “methodological and philosophical foundations of economics.”⁸ Participants were kept abreast of the latest philosophical developments through the participation of Felix Kaufmann, who was a member of the Vienna Circle formed in 1924 by philosopher Moritz Schlick. In its manifesto of 1929, the Vienna Circle had expressed confidently that a scientific approach to social problems based on empiricism and logic ought to shape economic and social life in accordance with rational principles. In addition to Neurath, many of its important members like Rudolf Carnap, Hans Hahn, and Philip Frank had socialist convictions and conceived the philosophical work of the Circle as intimately connected with the rationalization of politics and progressive social change. In its early days, the logical positivist movement had a distinctly political flavor. Their unified and scientific world conception provided the philosophical and methodological basis for the integration of everyday life with politics and science, aiming at a comprehensive reform of society along egalitarian lines.

The positivist philosophy of science of the Vienna Circle became conflated, in the minds of their opponents, with socialist politics and economics. Neurath’s radical politics repelled someone like Hayek, who credited the former’s “extreme” and “naive” views on economics with his conversion from positivism.⁹ In 1935, Karl Popper published in German The Logic of Scientific Discovery, his epistemological critique of the positivist premises of the Vienna Circle. Neurath and Carnap were singled out for their defense of physicalism: the view that scientific theories are little more than a formal system of signs with their corresponding rules for application—a “practical analog” to social reality. Against their “logical empiricism,” Popper proposed that theory and experience constantly modify each other through criticism to such an extent that “the empirical basis of objective science has thus nothing ‘absolute’ about it.” Instead he famously proclaimed that science did not “rest upon solid bedrock” since “the bold structure of its theories rises, as it were, above a swamp.”¹⁰ The falsification device favored by Popper to test the validity of theories did not convince the rest of the Vienna Circle, and Neurath remained adamant that Popper’s view of science as a permanent revolution neither reflected scientific practice nor served it well.

Paradoxically, Neurath and Popper were much closer to each other than to some other Circle members. Both embraced a revised conventionalism, combining anti-absolutism and non-foundationalism, which discarded the view that scientific knowledge “corresponded” to reality. More importantly, Popper renounced any psychological foundation for knowledge, something which later became important for Hayek’s own rupture with Mises’s a priori praxeology of human action. In the cases of both Hayek and Popper, the distance they took from their initial intellectual environments entailed an epistemological argument that science could not rely on either deductive apodictic structures nor empirically derived protocols to guarantee its validity. Instead, they reckoned that truth corresponded to the result of an intersubjective process—thereby “socializing epistemology.”¹¹ The heuristics of this process depended on three interrelated provisions: the methodology employed for discovery and justification, the design of its institutions, and the values shared by the participants. In the end, the epistemological conditions of truth and of social order ultimately shared the same foundations: that of conventional rules which could be revised and improved according to an established method.

The existence of the Vienna Circle had been equally crucial for its only French member and other major philosopher of science within early neoliberalism: Louis Rougier. Although one of its most unsung representatives, Rougier charted the clearest path among early neoliberals for an epistemological critique of rival political ideologies (on Rougier see Schulz-Forberg’s chapter in this volume). His portrayal of socialism as a scientific fallacy originated in his early epistemological works in which he rejected the validity of all opodictic truths. Following Henri Poincaré, Rougier proposed that a scientific proposition, instead of being either a rational truth a priori, or an empirical truth a posteriori, could be a “hypothesis” or an “optional convention” picked for reasons of practical or theoretical convenience and tacitly accepted as such by the scientific community.¹² Poincaré’s geometrical conventionalism, once extended to all disciplines, pointed to a “third way” which preserved the possibility of scientific objectivity while acknowledging the artificiality of reasoning and truth.

Rougier’s real foe, however, was not so much rationalism as a philosophical system than as a political doctrine. He contended that the spirit and ideas of the French Revolution, originating in classical rationalism, had ended up “par une sorte de logique immanente” in egalitarian socialism.¹³ For Rougier, political principles merely represented useful conventions suggested by experience. Any philosophical attempt to naturalize or rationalize these axioms must employ a metaphysical discourse that is ultimately unsubstantiated. To some extent, Rougier followed the same epistemological path as Hayek and Popper. Inspired by conventionalism, his criticism of a priori truths convinced him that the determinants of knowledge rested with the scientists themselves and the discrete but rigorous methodological rules they adopted.¹⁴ Rougier’s community of views with the Verein Ernst Mach in Vienna and Reichenbach’s Gesellschaft für empirische Philosophie in Berlin led him to join both groups, and to attempt to create, without success, a similar society in France: la Société Henri Poincaré. Despite his close acquaintance with Neurath, with whom he organized in 1935 the First International Congress of Scientific Philosophy in Paris, Rougier’s philosophy and politics were closer to the “right wing” of the Vienna Circle (Moritz Schlick, Friedrich Waismann, Felix Kaufmann) than to the left one.¹⁵

Rougier and his Viennese colleagues hoped to demarcate a sphere of knowledge sheltered from the metaphysics inherent to any language, and by extension, to any political ideologies. For Hayek, Rougier, and Popper, the application of the methods of empirical science to social phenomena raised methodological dilemmas, which were superimposed onto diverging political orientations. While sharing the same imperative as their Viennese counterparts of demarcating a deconte...

Table of contents

• Cover Page
• Halftitle Page
• Title Page
• Copyright Page
• Contents
• List of Figures and Tables
• Acknowledgments
• Introduction
• Part One: Neoliberal Science Beyond Market Fundamentalism
• Part Two: Neoliberal Subjectivity Beyond Homo Economicus
• Part Three: Neoliberal Internattonalism Beyond the Washington Consensus
• Part Four: Neoliberal Influence Beyond Reagan, Thatcher, and Pinochet
• About the Contributors
• Notes
• Bibliography