The Geneva School and its Ordoglobalists

by Stefan Kolev

Four cities are usually considered the birthplaces of neoliberalism: Vienna, London, Chicago, and Freiburg. In his new book, Globalists. The End of Empire and the Birth of Neoliberalism(Harvard University Press, Cambridge, MA, 2018, 393 pages), historian Quinn Slobodian points out that an important place is missing in this series: Geneva. The Genevan melting pot of neoliberal ideas in the immediate vicinity of major international institutions was formative in the various attempts to establish an order for the global economy over the past nine decades.

The beginnings of this “Geneva School” emerged during the age of the League of Nations. Its officials organized conferences in the search for remedies for an international order which had been shattered by the Great War and the Great Depression. In addition, the link to the Institut universitaire de hautes études internationales (HEI), established in 1927, was crucial: Its founder William Rappard appointed emigrants such as Ludwig von Mises and Wilhelm Röpke to the HEI and set up numerous lecture series there for other neoliberals such as Friedrich August von Hayek, Lionel Robbins, Jacob Viner, and Gottfried Haberler.

After World War II, the Geneva School experienced a split, the bone of contention was the early phase of European integration. Older neoliberals like Röpke and Haberler, called by Slobodian “universalists”, kept fighting for a unified international order. The younger “constitutionalists”, in contrast, strived to first set up an order for the European common market, putting up with the possible temporary result of a “Fortress Europe” vis-à-vis the rest of the world. As in the early days of the Freiburg School around Walter Eucken and Franz Böhm, research communities of economists and lawyers were similarly central for the younger “ordoglobalists” – most important among the second-generation ordoliberals were the economist Erich Hoppmann and the lawyer Ernst-Joachim Mestmäcker.

From the 1970s onwards, a further constitutionalization took place: The loose institutional structure of GATT was gradually transformed into a full-fledged organization, the WTO. According to Slobodian, a new generation of officials, including the economist Jan Tumlir and the lawyers Frieder Roessler and Ernst-Ulrich Petersmann – the latter two socialized in Hayek’s Freiburg during his tenure there in the 1960s – attempted to upscale the European successes to the global level. The WTO was designed to institutionalize a global framework of rules as well as the corresponding enforcement mechanisms. The book ends with the criticisms of globalization that have been visible at least since the 1999 Seattle protests, and the ensuing efforts of the Genevan “ordoglobalists” to set up a more solid basis to legitimize the order of the global economy.

Large sections of the book indicate that Slobodian is having a hard time separating the positive analysis from his value judgments. As an example, the reconstructed connections of neoliberal thinkers with the business world are not always particularly convincing, especially when he insinuates that the neoliberals stood for their ideas – for example, to reduce tariffs in the interwar period – precisely because of the congruence with the interests of the business world. Still, Slobodian asks an important question here when contrasting ideas and interests: To what extent do neoliberal ideas add up to a coherent philosophy?

In his search for an answer, Slobodian concentrates on working out tensions in neoliberalism, especially between democracy and the market order. He did not portray the neoliberals as state-haters – rather, they are depicted as designers of overarching institutions whose main and decades-long objective was, in Slobodian’s interpretation, to shackle national democracy, to curb its interference into private property rights and to curtail its welfare state generosity. In this criticism of the neoliberals as alleged anti-democrats, however, it remains rather vague and unclear what Slobodian’s own concept of democracy is and what a constitutionally unrestricted democracy would amount to in his view, especially with regard to the protection of minorities.

Neoliberalism can also create a tension between its own cosmopolitanism and personal concepts of culture. Wilhelm Röpke is an example of this. In his late writings, he defended South African apartheid and did not confine himself to geostrategic considerations, but expressed a disconcerting skepticism about the civilization of the black population. Embittered by modernity and developments in the liberal Mont Pèlerin Society during the last years of his life, Röpke’s attitude remained an exception among the neoliberals who otherwise adhered to their cosmopolitan attitude.

Slobodian poses another original question: Did the representatives of the “Geneva School” – this term fits only to a limited extent for the rather loose neoliberal networks, characterized by many discontinuities – still remain economists after the World War II, as understood by the discipline in its postwar self-perception, or can they perhaps be better understood as lawyers? Indeed, also radicals like Mises were scholars concerned with institutional design and thus with the legal framework. However, social philosophers also deal with such questions, and from the 1940s onwards Hayek and Röpke understood themselves precisely as social philosophers. Overall, the Geneva approach combined Hayek’s warning of the pretense of knowledge with the Freiburg plea for “Ordnungspolitik” to design the framework of the order, and with this particular synthesis, the ordoglobalists shaped both European integration and the WTO.

This recommendable book would have gained even more in quality if the author had employed less pathos and more differentiation in the portrayals. Still, it remains Slobodian’s merit to have shown concrete channels how ideas can make it into the design of institutions, especially on the international level. At a time when the order of the global economy looks increasingly fragile, and when left-wing critics of globalization slip argumentatively close to the right-wing populists who equally oppose liberal “globalists” and aim at reclaiming national democratic sovereignty, an alert eye for the possibility of such confusions and unpleasant coalitions is more important than ever.

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