A group of 20th-century intellectuals saw the democratic nation-state as a threat to private property. Their solution: shifting power to unaccountable international bodies like the WTO, helping pave the way to what we now call “neoliberalism.”

Friedrich Hayek, photographed in 1960. (Bettmann / Getty Images)

The neoliberal era is often characterized as one of deregulation, of the unfettering or freeing of market forces that had been reined in, or “embedded,” during the postwar decades. In his book Globalists: The End of Empire and the Birth of Neoliberalism, historian Quinn Slobodian argues against this understanding of neoliberalism. Instead, Slobodian claims, the neoliberal turn was about “encasing” or protecting markets from democratic control and establishing an international order that ensured capital’s ability to flow freely across borders.

Daniel Denvir interviewed Slobodian about his book for the Jacobin Radio podcast The Dig. This transcript has been edited for length and clarity.

Daniel Denvir

In his review of your book, Adam Tooze wrote “neoliberalism has many histories. Milton Friedman, the Chicago School, Pinochet, Thatcher and Reagan’s market revolution, IMF structural adjustment, and shock therapy transition programs for the post-communist states are all fixtures in the narrative of the neoliberal turn.”

What history of neoliberalism is it that you are telling in Globalists, and how does it relate to these others?

Quinn Slobodian

I think the story I’m telling is the story of people who saw the problem of capitalism not from a national or an imperial perspective or indeed a racial or a gendered perspective but from the position of the planetary — looking at global capitalism from a great distance and saying, “What institutions does this giant teeming thing need to have locked in to continue to reproduce itself?” So, Theresa May’s “A citizen of the world is a citizen of nowhere” thing is in many ways the subject position that I’m trying to excavate from the point of view of my actors.

Daniel Denvir

I want you to explain this idea that’s at the core of the Geneva School, which is the proposed division between economic governance and the governance of other matters, what they envisioned as a double government. Why did they think that the economy needed to be protected from national governments? And how did they think that could happen?

Quinn Slobodian

In the story I’m telling, the twentieth century is marked by two events in particular. The first is the end of empire, and then associated with that is the generalization of universal suffrage, or one person–one vote democracy. And this, in a way, gets to the core of what is “neo” about the neoliberalism I’m looking at: they’re approaching a terrain on which there is this universalization of an assumption that people should have a particular territory inhabited by people that look like them or speak like them, and that territory should somehow reflect the shared destiny or the shared aspirations of that community of like-minded ethnic or national people.

That principle, that idea of national self-determination, doesn’t always but can run directly against the notion of global economic interdependence. So, what the neoliberals that I’m looking at in my book saw was that as people were given votes at a mass level, as they organized into nations split off from the original large European empires, they started to make decisions that interrupted the free flow of goods, the free flow of capital, and the certainty that capitalists had enjoyed through much of the nineteenth century that if they owned property in one part of the world that was not their own country they could nevertheless rely on its security in the long term, or that its security would be guaranteed by home financial institutions, the intervention of gunships, and so on.

So, the rise of democracy and the rise of national self-determination in the twentieth century produces a whole new set of dilemmas for neoliberals who are trying to imagine an institutional framework that can protect global capitalism.

Daniel Denvir

This is specifically what you call the human right to capital flight.

Quinn Slobodian

That is one of the things that I discuss in the book, this notion that the freedom of capital to be able to leave when it wants and come back when it wants is essential to the reproduction of the system as a whole. As it turns out, that very right was being infringed on in what we call the Bretton Woods system that was created after World War II and lasted until the 1970s.

This was a period where, unlike today, capital wasn’t entirely free to go from country to country. There was a kind of normalization of what are called capital controls. Even though this was often a project that was failing, nevertheless there was a kind of a norm that nations should have as part of their repertoire of tools and of sovereignty the right to control the flow of money in and out of their countries. That’s something that presents for the neoliberals as a major problem immediately after World War II and one that one can see as kind of being solved by the move to a more flexible exchange rate system by the 1970s and then the general discrediting of the idea of capital controls.

Daniel Denvir

So, they proposed this division between a global order that protects the economy from the interference of nation-state governments. And then the other part of that division is what you describe, or they describe, as “culture,” which would still be in the purview of the nation-state. What is it precisely that the neoliberals wanted to leave to the nation-state? Because it doesn’t seem like very much. And why did they want the nation-state to maintain its ornamental sovereignty?

Quinn Slobodian

Well, I think there’s different ways of looking at it. On the one hand, democracy as a principle is praised by people like Friedrich Hayek and Ludwig von Mises for the reason that it provides the best instrument for the peaceful transition of power that humans have collectively yet invented. So, on average, democracy does work to preserve a certain level of stability from year to year and decade to decade.

On the other hand, it always had the threat of tipping over into legitimizing infringements on the right of capital and free trade to exist that for them made it something that needed to be contained — put within constitutional constraints, not necessarily unlike the way that liberals have talked about the constraint of democracy from the beginning of the founding of the United States onward. So, they aren’t really that strange in that regard, in their thought that there needs to be constitutional limits on majoritarian rule. Democracy is functional in that sense.

Where it can be even more helpful is with the idea of competition between different policy regimes, the idea being it’s actually good to have a checkerboard of different sovereignties because then you can try things out. One nation-state can experiment with raising taxes, the other one can experiment with lowering taxes, and let’s see how capital decides to allocate itself within this competitive field. So, there’s a way in which many competing democratic nation-states can actually provide for a field of experimentation for policy that neoliberals actually saw and see as quite useful.

So, the notion of dissolving the entire world into a single polity or a single state is really not one that is entertained by the people that I look at in my book. They see a kind of virtue to political fragmentation, matched by an institutional global holism or a single global economic institutional interdependence, because that can allow this interplay between factors of production, following their attraction to the best sites of their application. And as long as that balance is not overly disrupted, then this is actually the best possible working arrangement.

The sovereignty isn’t necessarily purely ornamental because, in the minds of people like Hayek and Buchanan anyway, sovereignty is being granted to states through democratic processes to governments. Then, those governments choose to grant their sovereignty upward to things like binding agreements like the World Trade Organization. In their minds, sovereignty, in fact, isn’t being infringed upon. Sovereignty is being exercised. But nation-states are choosing to exercise their sovereignty in such a way as to reinforce a global economic interdependence. So, they don’t see that paradox that a lot of critics of neoliberalism see.

Daniel Denvir

It seems like a similar paradox that a critic might see — but that they might not — is that they seem to have different perspectives on the mobility of labor and capital. They want capital to always have the human right to move. But there’s a variety of different takes on the mobility of labor that different neoliberals of the Geneva School take.

Mises, I think, argued for the freedom of movement, but Haberler insisted that it not only wasn’t necessary for free trade but that it wouldn’t even be desirable if it were possible. And he doesn’t believe it would be possible. And Hayek ultimately defends Margaret Thatcher’s immigration restrictions. Explain a bit about the Geneva School’s approach to labor mobility and what it revealed about their ideological framework more generally.

Quinn Slobodian

This is a shadow subplot in the book that I wrote, and in retrospect, I wish that I had drawn it out more. But it’s something that, I realized after writing the book, is sort of happening without my drawing the attention of the reader to it. But what’s happening is things change over the course of the twentieth century. At the beginning of the twentieth century, the frame of reference for people like Hayek and Mises and Haberler is really the Habsburg Empire and then the Danubian Basin or the area of Eastern Europe that is comprised of the different nation-states that succeed the Habsburg Empire. When they’re looking at that space, they’re actually pretty doctrinaire in their support of the freedom of labor to move from one side to another.

For Mises, especially in his early work, he is quite orthodox about the absolute necessity of the freedom of labor — that labor, like all other factors of production, needs to be able to go where it’s most needed. In his mind, this is a salutary process that will probably lead to the dissolution of some nations, but then it might lead to their recombination in different forms once [people have] emigrated. And there’s no essential problem with this. He saw nationalities and ethnicities as unmoored from this or that territory. They should be able to form themselves in immigration as much as they can in the places that they are ancestrally rooted to.

So, this is still a kind of nineteenth-century vision of the Great Migrations that moved people from Central and Eastern Europe to North America and also the huge migrations that were moving internally from the countryside to the city that really drove the Industrial Revolution. It’s quite absolute in its belief in labor mobility as a principle, this early Austrian position.

What changes is really the world wars. So, World War II produces a situation in which human mobility is now perceived as a quite acute national security threat, particularly when you think about the way in which the entire Japanese population in the United States was brought under suspicion as a kind of a fifth column for the emperor. The German population, too, was to a lesser extent also stigmatized and brought under suspicion even if they’d been there for generations. And what people like Mises said, looking at this situation was, effectively, “This is a problem, but it’s a temporary problem. But for the time being, let’s try to conceive of a system of global capitalism that doesn’t rely anymore on free labor mobility.” So, they say, given these constraints, “What might we see as a provisional working model of something that could still work?”

And in that state of mind, someone like Haberler comes up with the theory of comparative cost, which makes, in formal international-trade-economics terms, the argument that if you have enough movement of goods and capital, then you can profit just as much from free trade and free capital policies as if you had free movement of labor. So, he produces a kind of epistemological foundation or alibi for a closed borders for people position. Not, I think, because he has any kind of inherent antipathy toward foreigners or people of different races, but because the circumstances of the borders that came up in the course of World War II are being taken seriously.

Daniel Denvir

Yet it’s telling, perhaps, that while neoliberals are able to cultivate such a utopian disposition toward markets, they are willing to be realists when it comes to the boundaries of the nation-states for ordinary people.

Quinn Slobodian

No, absolutely. I think that’s unquestionable. And the way that this develops only drives that point home all the more clearly, because what we get in the course of the twentieth century, of course, is not just the occurrence of two major world wars but also migration from the Global South to the Global North in significant quantities that we haven’t seen since the mass forced migration of slavery that effectively founded the United States and the movement of Asian laborers into the Western United States and Canada and Australia in the late nineteenth century, which was shut down by exclusion acts.

But what you get in the postwar period — the 1950s, 1960s, and 1970s — you start to get the movement from French colonies and then the former French colonies into the French metropole. You get guest workers arriving in large numbers from places like Turkey and Morocco into countries like West Germany and the Netherlands. And you get people from the British Commonwealth and the former British Empire migrating into the United Kingdom. So, the creation of a multicultural and a multiracial Europe — a multiracial Britain, a multiracial France, a multiracial Germany — brings home this “problem” of a clash between different cultural styles in a way that neoliberals now are forced to confront.

The way that they confront it is, as you say, not exactly inspiring in the evenness with which they apply their absolute principles to people as they do to goods and capital. What Hayek concludes in the late 1970s looking at Thatcher’s policy, which was to effectively end immigration from countries of the Global South if she had had her way. Hayek supports it. He doesn’t come out in principled opposition to that and say that people deserve the same rights and movement that capital does. That would at least be a kind of honorable libertarian position, you could say.

But he said, no, people are a special kind of factor of production, in effect, and they can be very disruptive. And as he says, the origins of racialism come from the inability of long-standing residents of countries to extend their welcome to newcomers. So, he creates an analogy to Vienna on the arrival of large numbers of Jews from further east and Eastern Europe and Russia. And he says, when the Jews arrived, they were unable to assimilate quickly, and they ended up being a disruptive force, and it actually ended up producing antisemitism. Their presence produced antisemitism.

Daniel Denvir

He is by no means endorsing Enoch Powell’s “River of Blood” speech, but he’s sort of naturalizing the perspective underlying it.

Quinn Slobodian

It’s hard to say. I mean, he’s on the record being directly critical of Powell. There’s an excellent new biography that I recommend to anyone who’s interested by a historian named Camilla Schofield, and she documents there — and I’ve even seen the originals in the archives — Powell, really bristling at the way that Hayek comes and calls him out. He uses some term like “deranged fever dreams” referring to Powell. It’s not a soft insult or slag on Powell that Hayek delivers. So, I really hesitate lumping them together, because I think there is a substantial difference between them. In fact, this is something I’m sure we’ll talk about, but it leads to the substance of my current research. But there is something different from the Hayek position, which is basically that people have a hard time getting along in the short term, but in the long term they will adapt to one another’s presence. But we need to be mindful of the short-term problem and then probably put strict limits on migration for now.

That’s one position versus the Powell position, which is effectively that there is something essentially different about these two racial or cultural groups and they deserve to be separate, now and forever. And that latter position, the strong culturalist or racist position, is one that has its own genealogy, and it happens to not be the one that Mises and Hayek inhabit.

Daniel Denvir

Before we move on, Powell was a Conservative Member of Parliament who in 1968 gives this “River of Blood” speech, which is just this hyperbolically extreme warning about Britain being flooded with nonwhites.

Quinn Slobodian

He’s become a kind of icon of the Little Britain white resistance to the changing demographics of their country and really of the world in general. That’s a certain kind of reactionary conservative position that is consistent with some of the people I’m writing about, in the sense that Powell also happens to be strong for the gold standard; he believes that gold must flow, even though people must not.

But nonetheless, what I see with the Austrian development, in the case of my characters, Hayek and Mises, is what starts as an absolute position of free mobility turns into a provisional bracketing of it, saying we make an exception because it’s wartime. Mises says we can’t expect the United States to let in hordes of Japanese or Germans now in the middle of the war. And he says in this eminently quotable line — quotable now by right-wing libertarians — “There’s no man who would not shudder at the image of masses of colored people living amongst them,” something to that effect. So, there is an acknowledgment that humans are imperfect and xenophobia exists, but it’s not made a core part of their system.

What you get the hint of with Hayek in the Thatcher moment and a bit more in his 1980s writing on morality is this idea that indeed there might be a patrimony of certain cultural virtues that adhere to certain cultural groups, not to others. And then, that becomes a dangerous way to argue for a strong separatist or segregationist version of free-market liberalism — which sounds like a contradiction in terms, but it’s not.

Daniel Denvir

You argue that, contrary to the standard picture of neoliberalism as the unleashing or freeing of the market, or for those who are following Karl Polanyi, “disembedding the market,” neoliberalism was actually about encasing or protecting markets from democratic control and doing so quite specifically at the global level. Explain the argument you’re making.

Quinn Slobodian

I think that the phrasing that I use, especially in the introduction there, is to push back against a common metaphor that we hear about, especially the period since the 1970s, as an unfettering of markets. You hear about unfettered trade or unfettered capital movements. When you study the practice and the history of international economic law, it’s a strange way to describe what has happened since the 1970s because what you’ve actually observed since the ’70s is a proliferation of legal instruments, of legal institutions, of the power and jurisdiction, of new forms of international economic law to police, oversee, regulate, and sometimes enforce legislation not just at the border but beyond the border and into the private conduct of states. A case in point there is the European Court of Justice, which has the right to overturn decisions made within the national level or even to compel nations to do things like, as it’s done, to stop supporting national businesses or to sell off nationally owned industries.

This whole apparatus has gotten more and more complex since the 1970s. One of the signature articles written about the emergence of international economic law, written by David Kennedy, a professor at the Harvard Kennedy School, sort of makes a joke at the end of it, saying what this emergence of international economic law should make lawyers realize is that it’s time to reach for your résumés, because you’re going to have more jobs. This is actually a growth field. The oversight and arbitration, litigation and settlement of all of these cases is something that is keeping entire armies of lawyers and bureaucrats busy.

So, the image that we have, such as globalization as a kind of zapping of forces all over the world in response to the ever-changing landscape of supply and demand . . . this idea that the world is flat and things simply move to where they’re needed and the whole thing is frictionless, and that’s a problem, we need to slow it down — I think is misleading. I think that the reality of globalization is an ever-denser thicket of legal instruments to push trade and investment and migration in one way and not others. And what I was trying to describe in the book is the normative logic at the heart of the people who are thinking through the way they want the global economy to be regulated.

So, this pushes us away from the idea of neoliberalism as deregulation, which I think is really misleading; it pushes us away from the idea of market fundamentalism on the premise that we actually have anything that could be called a free market or a disembedded market. Rather, what we see is a particular kind of an embedded market, a particular form of regulation. I found that, rather than unfettering, the idea of encasing a particular set of arrangements is actually gets descriptively much closer to the world that we live in.

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