The Political Theory of Neoliberalism
Thomas Biebricher



The Political Theory of Neoliberalism

At some point during Bryan Singer’s genre-redefining 1995 thriller, The Usual Suspects, the elusive villain Keyser Söze shares some of his wisdom with the audience: “The greatest trick the devil ever pulled was convincing the world that he doesn’t exist.” Something similar might be said about neoliberalism even if attributing infernal implications to it might seem a little far-fetched. The term is as ambiguous as it is contested. While some consider it to be synonymous with the unleashed forces of turbo-capitalism (Bourdieu 1998; Chomsky 1999), others think of it as a moderate version of classical liberalism’s blunt imperative of laissez-faire. And while some note a decade-long march of victory of neoliberal policy regimes worldwide (see Harvey 2005), others disparage it as a figment of its critics’ fevered imagination that does not even exist—let alone rule the world—and the term ought to be sent into semantic retirement. The latter perspective contends that neoliberalism is not only vacuous but has also become so politically charged that it serves as little more than a polemical tool for theoretical and political smear campaigns waged with denunciatory intentions. And to be sure, this is correct insofar as there are hardly any self-proclaimed neoliberals to be found. Since it was (re)introduced to academic and political discourse in the early 1990s, only its critics have used the term (see Boas and Gans-Morse 2009). At present there is a growing reluctance even on their side to make use of it because it disqualifies any speaker as a potential ideologue with anticapitalist biases. If you call someone neoliberal, it suggests that you are unwilling to engage in reasoned argument and would rather resort to polemical name-calling. So even if neoliberalism ruled the world, it would be a neoliberalism without any neoliberals, and even its academic critics dare not speak its name—a truly devilish trick.

I first show that neoliberalism is far more than a chimera made up by its critics. Neoliberal thought developed as a response to the crisis of liberalism in the 1930s, and there is a common denominator to this body of thought, albeit a thin one. It is not a common set of doctrines but what I call the neoliberal problematic, which concerns the preconditions of functioning markets. This problematic characterizes the work of a number of thinkers who can be referred to as neoliberals in the proper sense of the term, such as the German ordoliberals Walter Eucken, Wilhelm Röpke, and Alexander Rüstow, but also Friedrich August Hayek, Milton Friedman, and James Buchanan.1 They provide me with the reservoir of ideas that I scrutinize in part 1, the central part of the book.

Here, I reconstruct, analyze, and problematize crucial elements of the political theory of neoliberalism. Neoliberal thought contains a genuinely political dimension that is integral to the neoliberal problematic and far from just an annex to a creed of self-regulating markets. Part 1 is structured around four major categories in neoliberal thought: the state, democracy, science, and politics. Neoliberal positions with regard to these issues vary considerably to the point of being outright contradictory, and part of the rationale behind this study is to capture the resulting heterogeneities and tensions between the various perspectives, which are grouped in varieties of neoliberal thought.

Part 2 shifts the attention to the world of “actually existing neoliberalism” (Brenner and Theodore 2002) with a focus on contemporary Europe, for two reasons. First, I am interested in an analysis of the condition of contemporary neoliberalism: how neoliberalism has been transformed over the course of the recent string of crises and whether and how it is thus different from precrisis neoliberalism. Second, I focus on Europe because the European Union (EU) and the Economic and Monetary Union (EMU) together are easily the most advanced laboratory in regard to the development of neoliberal political forms. Here we find neoliberal ideas encapsulated not just in nation-state structures and international (trade) regimes but as a supranational federation (with a common currency), which is a configuration that many neoliberals have reflected on extensively as a potential institutional panacea for a neoliberal project, all respective difficulties notwithstanding.

Consequently, chapters 6 and 7 are devoted to a discussion of the workings of the EU/EMU, to what extent they conform to neoliberal tenets and neoliberal thinkers’ views on the EU/EMU, as well as European integration more generally. Finally, based on preliminary arguments concerning the impact of ideas on political practices in general and particularly under conditions of crisis and genuine uncertainty, I argue that the Eurozone in its current institutional setup increasingly adheres to the precepts of ordoliberalism as one variety of neoliberalism. In this sense, we witness the ordoliberalization of Europe: Not only is competitiveness heralded as the aim of all reform efforts; the Eurozone now has a competitive order that forces all of its members into a particular form of competition with each other deemed desirable, which results in a generalized politics of austerity. Furthermore, the structural characteristics of this “economic constitution” implement much of the ordoliberal convictions with regard to the role of the state, democracy, and science in governing a market—albeit a market of jurisdictions. This form of governance is deeply skeptical of pluralist democracy, instead relying on a technocratic mode of policy making that borders on the authoritarian. If it is true that the sign of our times is the rise of authoritarianism, we should not mistake this to signal the end of neoliberalism. To the contrary, certain varieties of neoliberal thought have always contained an authoritarian dimension, which is now increasingly on display in its actually existing form in Europe and elsewhere. Neoliberalism, properly understood as capitalist markets embedded in authoritarian political forms, has far from run its course—it may have only just begun.

Let us begin with a closer look at the potential reasons for and against the continued use of the term “neoliberalism.” I see two critical lines of argumentation. The first disapproves of the way the concept has been reduced to a “political swearword” (Hartwich 2009) and demands a less value-laden analytical vocabulary to describe politico-economic ideas, policies, or institutions. The second highlights the closely connected problem neoliberalism shares with plenty of other terms that ascend to the status of intellectual buzzwords for a while: Because of their very popularity and subsequent dissemination into various disciplinary contexts and usage, they dissolve into amorphous catch-all terms or empty signifiers (see Brenner, Peck, and Theodore 2010, 183–184). “Discourse” and “globalization” have had to endure a similar fate.

The charge that neoliberalism is merely the semantic weapon of choice wielded by anticapitalist forces and it should be abandoned to make room for concepts and analytical categories not considered politically suspect betrays a problematic assumption. It implies the possibility of a language that is undistorted by political leanings and would offer an unbiased linguistic access to social reality. After all, only if there is an actual alternative to the allegedly polemical vocabulary of neoliberalism does the charge of its critics stick. However, this assumption is less than plausible. While twentieth-century positivism/critical rationalism as it is conceived of in the works of Karl Popper (who once was a member of the Mont Pelerin Society, a transnational network of neoliberals) may have dreamt of a fully transparent language that comes without any additional connotative baggage beyond its explicit meaning, few currently share this dream.

The likely rejoinder is to argue that philosophical reasons may not permit us to conceive of an unbiased language but that it makes an important difference whether we use more or less biased terms. So rather than speak of neoliberalism, we could simply refer to a market economy or just plain capitalism. Aside from the fact that even some first-generation neoliberals argued against the use of the term “capitalism” “because it suggests a system which mainly benefits the capitalists” (Hayek 2003, 1:62), a more general problem arises: cleansing social theoretical language of any biases comes only at the price of abstraction, which may leave us bereft of a vocabulary with any diagnostic potential. What is the intellectual value added when we describe societies as simply capitalist? That description was true a hundred years ago and even earlier. It is as accurate for a description of Sweden as it is for the United States—and almost all other existing economies. In other words, it is so true that it becomes trivial. However, social inquiry that does not aim at timeless nomological knowledge is well advised to take spatiotemporal context seriously and consequently requires terminological tools below the level of abstraction of “capitalism” and “market economies” to capture what is distinct about these contexts. Such diagnostic potential appears to be of considerable analytical and critical value for any endeavor aimed at capturing “what our present is” (Foucault 1989, 407), how it differs from the past, and how it might be different. Despite its inconveniences, neoliberalism can be considered a promising candidate in the search for a critical-diagnostic terminology applicable to the contemporary world—more promising, in my view, than alternatives such as late capitalism, post-Fordism, or advanced liberalism (see Barry, Osborne, and Rose 1996), which come with their own set of even graver definitional problems.

What are the definitional difficulties of neoliberalism; and are they unique to this particular term or a more widespread inconvenience associated with labels that refer to traditions and strands in political thought? Those opposed to neoliberalism because of its frequent polemical use in debates often link this polemical potential to the lack of definitive content of the term. Supposedly, it is the emptiness of neoliberalism that turns it into a perfect discursive weapon, rich in antagonistic connotations and very poor in solid content. There is no need to downplay these difficulties, which actually begin with the root term of neoliberalism: “liberalism.” Liberalism is a current of thought that, positively speaking, exhibits an enviable richness and has been described as intellectual home by a surprisingly heterogeneous group of thinkers. Less positively speaking, one could describe liberalism as a tradition of thought that is next to impossible to pin down to a definitional kernel (see Crouch 2011, 3). Consider that there are arguments made for an inclusion of the absolutist and semiauthoritarian thinker Thomas Hobbes in the liberal tradition. This is a clear indicator of how broad the liberal tent is, and we would expect that this translates, among other things, into difficulties with one of its genealogical heirs, neoliberalism. Beyond this common difficulty of labeling political genres, neoliberalism is laden with another complication rooted in the somewhat unique spatiotemporal dynamic experienced by its root term “liberalism.” What I have in mind is the slow transformation of the term “liberalism” beginning at the end of the nineteenth century, especially in the Anglo-Saxon world. It is here in particular that liberal thinkers combined elements taken from this tradition with agendas of a more social-democratic or progressivist kind. The “new” liberalism of a John Dewey or a T. H. Green led to a profound shift in meaning of the term, particularly in the United States and Great Britain, which continues to cause trouble for a shared political language between the Continental European and the Anglo-Saxon world.2 After all, this shift has left us with a constellation in which the left-leaning Continental European Social Democrat would be referred to as a liberal on the other side of the Atlantic, while a liberal in the Continental sense is probably considered a conservative in the American sense. This transatlantic divergence of meanings with regard to liberalism has left its mark on the usage of neoliberalism as well. Despite all the reservations noted, “neoliberalism” is an established term in European political discourse. But given the changed meaning of liberalism in the North American context, it comes as no surprise that neoliberalism can hardly be said to be a part of the repertoire of political discourse there. Audiences might wonder how neoliberalism can denote the very opposite of what they commonly view as liberalism. North American political discourse refers to the positions associated with neoliberalism in the European context as “libertarianism”—but the fate of the latter in European political discourse is the mirror image of neoliberalism in America: it is not a category of any significance in political discourse, its academic significance notwithstanding.

Should these terminological complications prompt us to abandon the concept of neoliberalism after all? My response is not to deny the difficulties of literally coming to terms with neoliberalism but rather to question the uniqueness of these problems and whether they should really be considered problems in the sense of avoidable mistakes resulting from faulty reasoning or something slightly different. The crucial point, in my view, is to clarify what we can hope to achieve with terms that designate anything from a political ideology, to an intellectual discourse, or a tradition of thought. Consider any number of examples from conservatism, liberalism, and socialism to critical theory, poststructuralism, or the “new materialism.” In each case, it is impossible to draw lines with geometrical accuracy that would enable us to distinguish unequivocally between, for example, conservatism and its closest intellectual siblings and cousins from liberalism to authoritarianism. I have mentioned that liberalism is arguably the best case to illustrate the difficulty of defining intellectual traditions that evolve in complex patterns over time and geocultural contexts. Although any but the casual observer is aware of the fuzziness at the heart of all of these concepts, there are few calls to stop referring to liberalism or conservatism because of their terminological/conceptual deficiencies. After all, if the standard we aspire to in our use of these categories is to map the intellectual-political landscape with geometrical accuracy, then we would have to rid the cartographic toolbox of neoliberalism and practically any other term used to describe what are ineradicably heterogeneous strands and currents in thought and more or less congruent political positions. The fact that a call to retire all of these imprecise terms has not really gained any traction suggests that the tacit expectations with regard to these terms are not that they provide us with exact markers of the intellectual-political territory but that they offer us a broad sense of orientation in need of constant revision and questioning. The closer we scrutinize what a tradition presumably stands for, the clearer its ambiguities come into view. Conversely, the more we find out about a particular thinker, the harder it becomes to group that thinker into any one tradition in an unambiguous fashion. We should not view this as some kind of pathology but rather as business as usual for political theorists. Finally, this business that preoccupies so many studies in both the history of political thought and contemporary theory should not be seen as a dry exercise in intellectual stock keeping. On the contrary, this is an eminently political activity, and the political nature of constructing these traditions is, aside from the reasons already identified, the main source of the unabated controversy surrounding any one particular definition of, for example, conservatism that suggests thinker X is part of that tradition while thinker Y is not. Contesting a certain interpretation of conservatism and the respective representatives may not be the most important activity political theorists engage in. However, it is anything but a trivial matter how we define traditions and chart political and intellectual territory because these are the terms in which political contestations are being conducted. So while some may complain about the fuzziness of political labels and their contested nature, political theorists should be aware of their limits and dangers but still embrace them as an important medium of political contestation—and this includes a fortiori neoliberalism.

Having provided a preliminary defense of the use of the terminology of neoliberalism, I conclude with an outline and brief justification of the two major, and potentially controversial, assumptions and corresponding methodological decisions underlying this study.

First, I assume that an analytical distinction can be made between neoliberalism as an intellectual project and neoliberalism as a number of concrete political projects in various empirical settings. While I am ultimately interested in both the theory and practice of neoliberalism, the starting point and focus of this study is the theoretical level. This approach might be considered an “ideas-centered understanding of neoliberalism” (Cahill 2014, 32), which is met with criticism, especially by those who subscribe to a more materialist view and suspect neoliberalism’s ideational dimension to be of predominantly ideological significance (see Harvey 2005, 19; Mirowski 2013, 68). They point to the alleged chasm between neoliberal theory and practice and reprimand nonmaterialist accounts for their alleged disregard for the embeddedness of ideas in interest- and institution-based power structures that keep the former in place (see Cahill 2014). While I am not in principle opposed to studying “actually existing neoliberalism,” the subject of part 2, I do see some problems with focusing exclusively on this dimension, because strictly materialist accounts come with their own set of difficulties. First, materialists routinely define some policy regime of, for example, privatization and marketization as neoliberal, but how would one arrive at such a definition without consultation of neoliberal texts and the ideas contained in them? For decades there was no neoliberalism, except in the form of an intellectual discourse, so taking the respective political practices as a starting point is not a self-evident choice. Furthermore, the alleged discrepancy between neoliberal theory and practice is overstated in many materialist accounts, arguably due to a lack of interest in neoliberal theory, which is often summed up as the doctrine of “self-regulating markets.” If this were an accurate interpretation, the divide between the two dimensions of neoliberalism would indeed be wide, but attributing an economistic view of market absolutism to neoliberal theory betrays a poor understanding of it.3 Instead, neoliberal theory is deeply interested in the link between politics, society, and economics. Once we take it seriously as a body of thought in political economy, it becomes clear that there are notable correspondences between these designs and neoliberalism in practice. To be sure, it would be wrong to suggest that there is a 1:1 correspondence between neoliberal theory and practice, or that actors regularly and consciously aim to implement neoliberal ideas, or that the latter somehow realize themselves—I have no Hegelian inclinations. However, to infer from this that neoliberal theory is simply inconsequential is to have an impoverished understanding of political life deprived of its ideational dimension.4 Finally, the price we would have to pay for not considering neoliberal theory in its own right but just an ideological veil of neoliberal practices is a political one. Imagine the response of a proponent of neoliberalism to the criticisms leveled at actually existing neoliberalism regarding, for example, its inequality levels or other problems. The answer would clearly not be that neoliberalism is to blame, but rather its poor and incomplete implementation keeps us from reaping the alleged rewards of thorough neoliberalization: The solution to society’s problems remains more, not less, neoliberalism. The only way to preclude this exculpating argumentative strategy is to engage neoliberalism on the level of theories and ideas to show that the problem does not lie with selective implementation, unfaithful to the spirit of the respective ideas but the very ideas themselves.

The second methodological assumption concerns my mode of engagement with neoliberal thought. The purpose of this study is not only to reconstruct and analyze the political theory of neoliberalism but also to offer a critique of it. While others make the case for (a particular kind of) ideology critique of neoliberal theory (see Mirowski 2013), my critique has a slightly different thrust and is based on two equally important components. First, I distill the positive contents of neoliberal theory’s political dimension and probe for internal inconsistencies and tensions within and between varieties of neoliberalism, as well as instances where if falls short of its own stated aspirations in what might be called an immanent critique. But as the time-honored discussions surrounding this mode of critique show, its strength lies in the fact that it engages its object on its own terrain and thus can never be off target, but its weakness flows from the same source. Accepting that terrain, the terms of engagement, excludes these from an immanent critique in its strictest form. Therefore, the second component is a focus on that which is not being said in neoliberal theory: that is, the assumptions and conditions presupposed and built into it, the resulting limitations and blindspots, and the implications and potential consequences of certain ideas were they to be put into practice. The result I hope to achieve is a rich and nuanced critique of neoliberal thought that is willing to give neoliberal theory its due: a critique that has no need to distance itself from each and every element of it to ensure the identity of some demonic “Other” that is neoliberalism and, conversely, the purity of the non-neoliberal that must not be contaminated by correspondences or partial agreements with it, let alone the outrageous idea of possibly learning something from its proponents. Thus, the critique I intend to develop is designed to be neither a refutation nor an unmasking in the sense of ideology critique but rather a problematization of neoliberalism’s political theory in its various aspects.


1. For biographical information on these thinkers, respectively, see Klinckowstroem 2000; Hennecke 2005; Meier-Rust 1993; Friedman and Friedman 1998; Buchanan 2007; Hayek 1994; Caldwell 2003.

2. The neoliberals were keenly aware of this shift, and it was one reason that they thought an alternative version of a “new” liberalism needed to be developed. Because of the terminological ambivalence resulting from this shift, many neoliberals tacitly abandoned the label later. The next chapter deals more extensively with these issues.

3. “The fallacy of identifying neoliberalism exclusively with economic theory becomes apparent when we notice that the historical record teaches that the neoliberals themselves regarded such narrow exclusivity as a prescription for disaster” (Mirowski 2009, 427).

4. I revisit these issues in part 2 and offer more extensive thoughts on how we may conceptualize the influence of (neoliberal) ideas on political practice.