The Political Theory of Neoliberalism
Thomas Biebricher



What Is Neoliberalism?

“Neoliberalism” is an inconvenient, albeit important, term for critical inquiries into the socioeconomic and political conditions of the capitalist present. Nevertheless, the problem remains that the potential usefulness of the term is greatly diminished because its meaning is unclear, or, possibly, as its critics believe, it has no meaning. Thus, it is no surprise that researchers who study neoliberal theory and/or practice feel compelled to offer a straightforward and unambiguous definition to preempt the charge of harboring an empty signifier floating around at the heart of their research agenda. However, this has led to a great number of studies that seek to define neoliberalism either through a set of specifically neoliberal policies like deregulation or privatization (see Chomsky 1999, 19; Larner 2000; Steger and Roy 2010, 14; Mirowski 2013, 333) or through some kind of conceptual kernel that supposedly represents its very essence (see Crouch 2011, vii; Mudge 2008, 706–707). However, these efforts are plagued by difficulties: There is an ineradicable air of arbitrariness to the various policy lists, and the breadth and internal heterogeneities of “variegated” (Jessop 2016, 123) and “polymorphic” (Peck 2010, 8) neoliberalism seem to defy any attempt at developing “a generic and trans-historical definition of neoliberalism” (Hay 2007, 53)—and this applies not only to actually existing neoliberalism but to its discourse as well. Still, it is hardly a solution to postulate that there “are thus a number of distinct, but related neoliberalisms” (Roy, Denzau, and Willett 2007, 5), since this only exacerbates the problem by having to define each and describe the nature of the bond that relates them.

This, then, is the predicament in which any work on neoliberalism finds itself. The main task of this chapter is therefore to develop an understanding of neoliberalism that avoids the overly parsimonious fallacy of attempting to “transcendentally ‘fix’ neoliberalism” with reference to some essence or core (Peck 2010, 15)—an understanding that is sufficiently accurate to capture the internal heterogeneity without dissolving neoliberalism entirely into multiple neoliberalisms without any underlying unity. I choose the following conceptual strategy in this undertaking.

Given the marked absence of any self-proclaimed neoliberals today and the suspicion harbored by some commentators that neoliberalism may have never existed other than as “a figment of the fevered left” (Mirowski 2009, 426), I argue that a useful starting point to investigate the meaning of neoliberalism is to look at what those who actually referred to themselves as neoliberals associated with the term. In other words, the first step in gaining an understanding of the neoliberal project(s) is the reconstruction of the historical context of its emergence, which may be summed up as the crisis of liberalism. Neoliberalism must be understood, first and foremost, as a response to this crisis based on a diagnosis of the factors that led to its decline. Out of this I distill what I call the neoliberal problematic, which, in my view, strikes the right conceptual balance between the unity and the heterogeneity of neoliberal thought. Neoliberalism, I argue, was never emphatically “one,” and the historical approach employed here has not been chosen in the hope of finding the single origin of neoliberalism, where its essence could be isolated from all contingent ingredients in pristine purity, because there is no such place. Despite the undeniable tensions within neoliberal discourse that characterized it even in its origins, what did unite those who called themselves neoliberals was a shared problematic that animated their efforts. The market lay at the center of this problematic, but the problematic was inherently political, as I show in contrast to the conventional economistic accounts of neoliberalism.

The Birth of Neoliberalism: The Colloque Walter Lippmann and the Crisis of Liberalism

It stands to reason that few if any of the participants of the Colloque Walter Lippmann anticipated that their meeting would retrospectively come to be considered as marking the birth date of an entire intellectual tradition when they gathered at the Institut International de Cooperation Intellectuelle in Paris during the last days of August 1938. The five-day colloquium had been organized to discuss the American journalist Walter Lippmann’s book The Good Society, published in 1937. Lippmann attended along with twenty-five mostly European thinkers from various countries (see Reinhoudt and Audier 2018; Walpen 2004, 55–61). In the records of this meeting we first find the term “neoliberalism” connoting a common agenda and a shared project.1 Of course, referring to the birth of neoliberalism and the records of the meeting makes it seem as if a single origin and a founding text by Walter Lippmann were, after all, available as core ingredients of a straightforward definition of neoliberalism, but the simplicity of the narrative and the metaphor is deceiving.

Neither is there a single origin of neoliberalism nor is there an “ur-text” authored by Lippmann or any other neoliberal.2 In fact, while Louis Rougier, who was the official convener of the meeting, supposedly added the term “neoliberalism” to the records after the meeting, it is not clear whether there was a consensus to adopt this particular label during the actual discussions (see Burgin 2012, 73; Walpen 2004, 60). More complications to the alleged birth of neoliberalism could be added, the gravest of which was the impending World War II, which stopped the neoliberal project with its plans for a research center, regular meetings, and intensified network building in its tracks. It took almost a decade after the Colloque for a similar meeting to take place—the second birth of neoliberalism, if you will—in April 1947, when sixty participants gathered in Switzerland to form the Mont Pelerin Society (MPS), which, to this day, is considered to represent a “neoliberal international” (see Mirowski and Plehwe 2009), although the word “neoliberalism” never even made it into the society’s official Statement of Aims that had been agreed on by the founding members.

Yet the Colloque still does mark a useful starting point for an examination of the neoliberal project because its agenda and that of the founding conference of the MPS, in combination with the writings of some of the participants, can help us reconstruct the context of the emergence of neoliberalism as an intellectual-political project and the rationale underlying it.

Lippmann’s Good Society was a highly inconsistent treatise; however, its diagnosis and overall assessment of the times struck a chord with some of the leading future neoliberals. Lippmann depicted and dissected a classical liberalism in rapid decline and called for an effort to stabilize and consolidate the course of an intellectual tradition that was otherwise bound to tumble straight into oblivion. This was the catalyst for people like Hayek in London or Röpke in Geneva, who shared some of these worries, to call for a meeting to discuss not only Lippmann’s book but the dire condition of liberalism more generally. Accordingly, the context of neoliberalism’s intellectual inception can succinctly be stated as the crisis of liberalism.

So let us take a look at some of the main factors that could be considered symptoms of the possibly fatal crisis of liberalism. By the late 1930s proponents of liberalism—and not only them (see Polanyi 2001, 3)—had become convinced that the decline of the liberal age had been set in motion with the onset of World War I in 1914. The war was of course a catastrophic and deeply traumatizing event for (Western) civilization in any number of respects, but it dealt a particularly heavy blow to a broadly liberal worldview for two reasons. First, the mostly optimistic outlook on history shared by many currents of liberalism, including the more popularized versions, was shattered by the atrocities of a war fought with the utmost disregard for human life; the Western Front was described as “a machine for massacre” (Hobsbawm 1994, 25). The relapse into four years of barbarism made the talk of progress (through commerce) ring hollow if not outright cynical. The world seemed to have entered a period in which the notion of progress became elusive and was increasingly replaced by “a sense of catastrophe and disorientation” (ibid., 94).

Second, the war complicated the liberal position because up until this time, ideas about (socialist) state planning had been just that, ideas that could be dismissed as unrealistic and irremediably utopian. However, World War I proved that economies could be run to a considerable degree on the basis of centralized planning without collapsing—which became even more obvious during World War II. At least in certain currents of liberalism the prime argument against socialism before the war had been that it was not only undesirable but also simply unattainable. This position became much more difficult to maintain with planning taking place in the war economy. To some extent the famous Socialist Calculation Debate during the 1920s and 1930s, in which some representatives of the Austrian school such as Ludwig von Mises and Hayek participated, has to be understood as an attempt to prove that despite these seemingly promising experiences, experiments in planning without markets and market prices were still ultimately doomed to fail.

During the 1920s, efforts were undertaken to restore the liberal civilization of the nineteenth century (see Polanyi 2001), but at the end of the 1920s they proved futile, as liberalism suffered another severe setback in the form of the Great Depression. While liberals had tried to prove theoretically that socialism was bound to collapse in the Socialist Calculation Debate, capitalism actually did collapse in practice on an almost worldwide scale. Given the enormity of the economic and social devastation caused by the crisis, it is no surprise that a broadly liberal position in favor of capitalist markets as indispensable guarantors of growth and wealth lost much, if not all, of its appeal, especially among the masses hit by unemployment and thrown into poverty. Thus, the crisis and its socioeconomic fallout created major problems for liberalism, as the pressure on elected governments to get involved in active crisis management and alleviate at least the most severe social problems increased to a point where the respective demands became almost impossible to ignore. Two developments in particular signify this turn of the tide that is of crucial importance for the inception of the neoliberal project.

The first is the New Deal, which President Franklin Roosevelt had characterized as “liberal” and which attracted considerable ire from Lippmann. The reforms associated with this label not only manifested a significant buildup of the American welfare state at the federal level through the introduction of a social insurance system; it also represented a profound change in the overall philosophy of the state. The state explicitly adopted a new set of responsibilities toward its population that no longer pertained only to defending it against external enemies, enforcing the law, and providing a minimum of public infrastructure. It now included attending to socioeconomic welfare more broadly, especially with regard to the adverse effects of a capitalist economy (see Hobsbawm 1994, 96, 138–140). The stoic attitude of letting economic crises run their course combined with the denial of any more than rudimentary responsibility for social ills had fallen into disrepute over the years of crisis, and governments all over the North Atlantic world began to reconsider their role in regard to the economy and society. John Maynard Keynes’s theories came to represent this changed attitude, which brings us to the next facet of the liberal crisis, the rise of Keynesianism.

As early as 1924 Keynes had famously proclaimed “the end of laissez-faire” in a lecture of the same title he delivered at Oxford. It may have been premature at the time, but the 1930s proved Keynes right, although “hegemonic Keynesianism” would not come to full fruition until the post–World War II era. Keynes essentially argued for an active involvement of the state in economic policy in its various aspects. The position shared by welfare economics and economic liberalism was that capitalist markets would more or less automatically recover from external shocks or crises and slide back into market-clearing equilibria, guaranteeing profits, growth, and employment. However, Keynes contended that it was possible for markets to get stuck in suboptimal equilibria where continued stagnation, unemployment, and deflation loomed large unless the state stepped in to jump-start the economy. This could be achieved through an expansionary monetary policy, such as lowering interest rates and thus reducing the price of money, but even more important, through public investment to boost aggregate demand and thus encourage the private sector to expand production and investment. As the Great Depression dragged on, Keynes’s view that dysfunctional markets without built-in correctives could get locked into crisis conditions offered the basis for a plausible interpretation of the empirical evidence. Moreover, his work, culminating in the General Theory of Employment, Interest and Money, published in 1936, provided governments with a sorely needed set of policy instruments that allowed for a more hands-on approach to dealing with an ailing economy. The rise of this activist philosophy of government, which even justified running deficits under certain conditions to pump money into an economy in crisis, was an important factor in the formation of neoliberalism, although the relation between the various neoliberals and Keynes(ianism) is more complex than one might expect.3 Overall, though, Keynes, and much more so Keynesianism as it was further developed by economists like Joan Robinson and Nicolas Kaldor, represented a veritable bête noire for liberalism in the 1930s and beyond (see Hayek 1978a). The rise of the former was inextricably tied to and gave a clear indication of the latter’s decline.

The final development contributing to the liberal crisis was surely the most alarming for the participants of the 1938 Colloque: the ascendency of deeply antiliberal political forces from Bolshevik Communism on the left of the political spectrum to European Fascism and German National Socialism on the right, as well as plain “old-fashioned authoritarians or conservatives” somewhere in between (Hobsbawm 1994, 113).

Needless to say, the very existence of the Soviet Union, with its centrally planned economy, provided a challenge for those liberals who had been arguing that socialism could not work. While it was hardly a secret that the Soviet Union had evolved into a deeply repressive regime that persecuted individuals and groups, its apologists pointed out that it had weathered the storm of the Great Depression better than many other societies, which had, in turn, raised the interest in “planning” even in capitalist countries (Hobsbawm 1994, 96). In any case, as repressive or even outright totalitarian as the Soviet Union may have been, in 1938, there was no reason to assume that it and its collectivist economy would collapse anytime soon. If the experience of wartime socialism was a thorn in the side of liberalism, proving that planning could work on a limited scale, the Soviet Union was a massive spear and evidence that entire societies could be organized according to a centralized plan—albeit at the cost of basic rights and the loss of hundreds of thousands of lives.

Similarly, Europe in 1938 was the site of triumphant antiliberal forces almost wherever the eye could turn—but here they predominantly hailed from the right of the political spectrum. National Socialism had seized power in 1933 in Germany, forcing the Colloque attendees Röpke and Rüstow into exile, and Italian Fascism continued to reign. In Spain, Franco’s Falange had defeated the republican forces in the civil war, and in other countries, such as Hungary and Finland, semifascist authoritarian movements and parties were not in power but gaining political ground. And like Soviet Communism, the Fascist and National Socialist regimes were far from crumbling; so for an observer of the liberal persuasion the overall scenery must have seemed rather apocalyptic. After all, while Communism and Fascism would not agree on much else, they were united in their fierce enmity of anything bourgeois or liberal (see Furet 1999): “For a generation liberalism in Europe seemed doomed” (Hobsbawm 1987, 333).

These are the most striking symptoms of the crisis of liberalism, and the neoliberal project must be understood as a reaction and response to what the neoliberals-to-be perceived as a crisis of truly existential proportions, one addressed in various sessions at the Colloque devoted to the factors responsible for the decline of neoliberalism (see Reinhoudt and Audier 2018). This interpretation of the neoliberal project as a reaction to the antiliberal syndrome just described provides us with the first clue for the clarification of the neoliberal project’s content through an understanding of what it was opposed to, or, to use an expression coined by Michel Foucault, its “field of adversity” (2008, 106).


1. To be precise, the term itself can be found even before this time. In a book from 1925 the Swiss economist Hans Honegger refers to a “theoretical neoliberalism” (13). Even earlier in 1911, somewhat surprisingly, Hans Kelsen uses the term in his Habilitation, albeit in a strictly uneconomic meaning. In both instances, however, the term does not refer to the kind of theoretical and political agenda of those who actually called themselves neoliberals. See Kelsen (1923) 1960.

2. Burgin refers to The Good Society as “the foundational text of neoliberalism” (2012, 67), but this ignores the fact that several years before the publication of Lippmann’s book, thinkers like Rüstow or Eucken had formulated very similar ideas in the context of the end crisis of the Weimar Republic and thus developed a neoliberalism avant le lettre. See particularly Rüstow 2017b; and Eucken 2017a.

3. While Buchanan was a relentless critic of Keynesianism in all its aspects, Friedman may have been strongly opposed to the Keynesian remedies but not necessarily all of its diagnostics. Before turning into a staunch critic of Keynes, the young Röpke still advocated a “jump start” for the economy in case of a “secondary depression” (1936, 119), which is hardly distinguishable from Keynesian demand management. Hayek actually became friends with Keynes during World War II, but while he respected his intellectual opponent (see Hayek 1994, 89–97), Hayek remained convinced that Keynesianism was a thoroughly erroneous view of economics. All translations from German are mine.