Monthly Archives: April 2013

The Global Community of Ideas that Created Neoliberalism

Apr 30, 2013 Christopher W. Schmidt

In The Great Persuasion: Reinventing Free Markets since the Great Depression, Angus Burgin, a historian at Johns Hopkins, offers the fascinating story of a trans-Atlantic group of intellectuals who, beginning in the 1930s, came together in an effort to articulate and promote an alternative vision to the then-dominant ideas of Keynesian economics.  In this short essay, I describe Burgin’s impressive contribution to the intellectual history of modern conservatism, and then offer some concluding thoughts on neoliberalism as a constitutional value today.

The basic story of the resurgence of conservatism, including free market ideology, in the second half of the twentieth century is well known.  What this fine book adds is a sensitive and nuanced portrait of those thinkers—economists, mostly, but not exclusively—who, through several generations of struggle, among themselves and with their antagonists, shaped the ideas of what has come to be known as neoliberalism.  Burgin’s overriding argument is that these people made possible the eventual triumphs of free market ideas in the public sphere.  Although often articulated in abstract and technical terms, these were ideas that would have a profound impact on American life and politics.

In making his case for the significance of this vanguard of free market intellectuals, Burgin advances several claims.  One is that inter-personal relationships and the “networks and processes of intellectual exchange” played a critical role in the development of the free-market movement.  At the center of this collective enterprise was the Mont Pelerin Society, a forum that Friedrich Hayek created in 1947 to bring together critics of the modern welfare state scattered throughout Europe and the United States.  As Burgin describes it, “individuals who were secluded in their national environments became, through the acts of congregation and communication, participants in a purposive community.”  The Great Persuasion is, in part, a history of this important but underappreciated “global community of ideas.”

Another claim Burgin presses (a standard, perhaps even essential, one for the modern intellectual historian) is for the importance of ideas.  Ideas matter because under the right circumstances they can be influential: the resurgent political commitment to free-market ideology of the 1970s and 1980s “could not have occurred without the committed efforts of a transnational community of ideas.”  They matter because they cannot be reduced to mere rationalizations for political or materialist interests.  Modern conservatism emerged in part because it seemed to provide a stable antidote to the anxieties of modern life; in part because of what Kim Phillips-Fein has called the “hidden hands” of wealthy business interests; and in part because of the racial anxieties of white America.  But, as Burgin persuasively argues, it cannot be reduced to these factors.  The idea makers at the heart of the book were far from paranoid or irrational; they relied on outside funding, but were militantly protective of their intellectual independence; and, at least according to the sources Burgin examines, racial politics simply did not cross their radar screen in any significant way.  (And when it does, they could be unpredictable: Milton Friedman opposed the Civil Rights Act of 1964 on libertarian grounds, while Hayek, although sympathetic to the libertarian concerns, believed the law was needed.)  They were true believers in the moral and instrumental supremacy of the free market.  This is not to say that their ideas were unaffected by political and material influences; but it is to say that they cannot be explained away by them.

Having made his case for why we should give considered attention to this collection of thinkers, Burgin then turns to exploring what they actually thought.  Here is where Burgin’s careful research into voluminous archival sources, in the U.S. and in Europe, yields an ultimately unsurprising but still quite valuable insight: their thinking was nuanced, tentative, and conflicted, and they regularly disagreed with one another.  Contrary to the caricatured images of Hayek and others that populate our contemporary debates, these were hardly doctrinaire free marketers.  Their heterogeneity was particularly evident in the 1930s, 40s, and 50s, when the movement was just finding its footing.  The early generations of free market advocates were united in their concern with increasing government intervention into the market.  Beyond this point of convergence, however, they struggled to agree on much of anything, especially when discussion turned from critique to alternatives.  The extent to which they embraced unfettered markets varied considerably.  They also struggled with the proper relationship of their project to the world of politics and policymaking.  These men (yes, all men here) were dedicated intellectuals who wanted to influence public affairs, but also feared the inevitable simplifications that would come from practical application of their ideas.  A major contribution of this book is to capture the rich complexity of the thought that gave rise to neoliberalism.

With the emergence of Milton Friedman as the leading public proponent of free market ideas, beginning with his publication of Capitalism and Freedom in 1962, a forceful, politically engaged simplicity became the new style of the movement.  In the second half of The Great Persuasion, Friedman takes center stage.  The University of Chicago economist built off the work of his predecessors, but he also seemed willing to push aside much of the intellectual humility that defined their project.  By the 1970s, free market advocacy had evolved into something quite different from what it had been in the early postwar period.  “Friedman’s confident language,” writes Burgin, “signaled that the moral quandaries and programmatic ambiguities of an earlier generation had been left behind, and a great persuasion had begun.”  Neoliberalism had found its public voice.

So what does this thought-provoking book tell us about the development of law and conservatism in the second half of the twentieth century?  This is a work of intellectual history; legal issues are only occasionally touched on.  Burgin evaluates the influence of free market ideas on economists and policymakers, not courts and lawyers.  Yet if we consider the dissemination of these ideas into the realm of American law, we find that its victory here was much more limited than in the realm of economics and policymaking.

Burgin’s protagonists defended their commitment to reducing government involvement in the market on two grounds.  One was pragmatic and functional—the free market, on balance, works; government is simply not good at managing the economy; the costs of government interference outweigh the benefits. The other was more idealistic—market regulation implicates individual liberty, and government regulation of economic relations can have liberty-curtailing spillover effects beyond the market.  Through the rise of the law and economics movement, the functional argument has clearly left its mark on the development of private law.  The idealistic argument has shaped how the public and their representatives talk about government regulation, yet its impact on the law—specifically the realm of public law, where liberty values are most obviously at issue—has been distinctly qualified.

The reason for this, of course, is the shadow of the Lochner era on modern constitutionalism.  American constitutional law in the post-New Deal era has identified certain non-economic rights as meriting judicial protection, while relegating economic rights to the democratic process.  Regardless of whether one is persuaded by the justifications for this approach (most of which emphasize limits of judicial competence and majoritarian pathologies that place non-economic rights at particular risk), it is worth at least noting that there is something aberrant about the virtual exclusion of economic liberty from constitutional law.  Over the past half century, neoliberal ideology has deeply affected popular attitudes about the relationship of government and society.  It has changed the way policymakers talk about their responsibility to the American people.  But when it comes to judicial understandings of the relationship of the Constitution to the economy, we still live under basically the same regime left us by the New Deal.  Modern progressives have written about social welfare rights as constitutional norms that are judicially underenforced.  After reading Burgin’s examination of the intellectual underpinnings of the post-New Deal transformation of public attitudes toward market regulation, it is hard to escape the conclusion that there is an even stronger case for some forms of economic liberty as constitutional norms that are currently underenforced by the courts.

In this way, The Great Persuasion invites further inquiry into exactly who was persuaded by these ideas and who was not—an issue of particular relevance for those hoping to better understand the uncertain (but still quite real) status of economic liberty in American life and law today.

Bargaining with the Soul at Stake: Early Modern Catholic Scholastics and Contract Law

Apr 1, 2013 Richard J. Ross1 comment

Decock’s judicious and insightful book participates in the rediscovery of the theological foundations of modern Western law.  With great precision he uncovers the debt that our contract law owes to early modern Catholic scholastic theologians such as Domingo de Soto, Luis de Molina, Leonardus Lessius, and Francisco Suárez.  These writers treated contracts not only as devices for the exchange of property.  They understood that contracting involved moral choices that could advance or retard justice and the prospects for the salvation of one’s soul.  In order to clarify these ethical dilemmas for Catholic confessors and for laymen wrestling with their consciences, scholastic theologians commented upon the ordinances of their own communities and the Roman law used throughout late medieval Europe (the ius commune).  Their works influenced early modern canonists, civilians, and natural lawyers and, through them, left an important mark on modern European and American contract law.

Decock focuses on how the theologians’ speculations led to the rise of the principle of “freedom of contract,” understood as the imposition of legal obligation solely through the consent of the parties.  The late medieval ius commune, drawing on Roman law, had allowed the creation of legal obligation through mutual consent only in certain areas, such as sales, leases, and partnership.  James Gordley and other distinguished legal historians have noted that scholastics went well beyond this inheritance to craft a generalized, consensualist “freedom of contract.”  But why in the sixteenth and early-seventeenth century?  The dominant interpretation has been that the acceleration of trade in the early modern period and the stirrings of “market capitalism” invited moral theologians to consider commercial transactions not adequately treated in the ius commune.  Although Decock accepts this interpretation as a partial explanation, he innovates by insisting that theologians thought that freedom of contract would facilitate the saving of souls.  The greater the realm of freedom among contracting parties, the greater their ability to pursue virtue, accept moral responsibility, and encourage trust—or the reverse.

Decock pursues his theme in a number of steps.  He first reconstructs the context within which his Catholic scholastics operated: rivalries between religious and secular authorities; extensive legal pluralism featuring numerous conflicting tribunals and sources of doctrine; theologians’ service as dispute resolvers and as advisors to rulers; and the profound “juridification,” or melding of law and theology, in early modern works on conscience.  He then explores how theologians reworked the ius commune to generate the concept of “freedom of contract” based on the mutual consent of the parties.  But this principle was not absolute.   The scholastics’ theological preoccupations led them to impose a number of limits on freedom of contract, a theme pursued at length in the final portion of the book.  “Vices of the will” might negate the meeting of the minds essential to contracting through consent.  In the pursuit of the common good, rulers could impose formalities that required more than consent alone to create contracts.  Finally, theologians ruled out unethical bargains (prostitution, for instance) and contracts that too greatly upset norms of fairness in exchange.

Decock’s deeply researched, judicious monograph is of interest to scholars of contract and to early modernists.  To the former he offers an alternative historical genealogy for the regime of freedom of contract (and its accompanying limits).  Although the impact of scholastic texts has long been noticed, Decock recovers the moral and eschatological motivations for legal ideas that we now discuss in practical and economic terms, having forgotten their theological provenance.

Early modernists will deepen their appreciation of the cross-fertilization of religious and legal ideas and the jurisdictional conflict involved in the governance of conscience.  Late medieval and Renaissance Christians subjected the soul no less than the body to rules and discipline.  They spoke of the conscience as an internal forum, a kind of jurisdiction, operating in the believer’s heart and mind and in the confessional.  This internal forum cooperated with the external forum of the state but was not reducible to it.  In respect to contract, theologians fused divine, natural and civil law to craft the principles governing the believer’s conscience and to suggest principles for the ruler’s tribunals.  This sustained effort by early modern theologians and jurists to chart the rules of the internal and external tribunals and to lay out the boundaries and modes of interaction between them was present not only in contract law but in nearly every contested area of life, from political oaths and allegiance to tithes, usury, and church/state relations.  Decock’s careful study of scholastic contract law thus illuminates larger issues.  First, the tension between the conscience and the state—understood as a kind of jurisdictional conflict between internal and external fora—adds another layer to our understanding of early modern legal pluralism.  Second, Romans 13:5 instructed Christians to obey rulers’ law not only for fear of temporal punishment, but for conscience’s sake.  Protestants as well as Catholics understood this verse to mean that violation of certain laws, if unrepented, put the soul in danger of damnation.  Scholastics worked so carefully on contract, as on other legal/theological issues, in order to alert the conscience to dangers and to offer reassurance to jittery or over-scrupulous Christians wary of acting.  The threat of damnation made the stakes profound.  Decock’s study, of great value in its chosen field of contract law, helps us better understand the implications of the juridification of conscience for early modern politics and society.