Early neoliberals rejected laissez-faire and wanted strong state action

Evidence

Since the epistemic innovations covered in our first section informed the MPS thought collective that the masses will never understand the true architecture of social order, and intellectuals will continue to tempt them to intervene and otherwise muck up the market, they felt impelled to propound the central tenet of neoliberalism—that is, that a strong state was necessary to neutralize what he considered to be the pathologies of democracy. The notion of freedom as exercise of personal participation in political decisions was roundly denounced (Hayek 1960, 13): you cannot activate your species being by participation in the polis. Hayek insisted that his central epistemic doctrines about knowledge dictated that freedom must feel elusive for the common man: “Man in a complex society can have no choice but between adjusting himself to what to him must seem the blind forces of the social process and obeying the orders of a superior” (1972, 24). Paraphrasing Walter Benjamin, citizens must learn to forget about their “rights” and instead be given the opportunity to express themselves through the greatest information conveyance device known to humankind, the market. This was not the night watchman state of the classical liberals; this was light-years from John Stuart Mill. The neoliberal thought collective, through the instrumentality of the strong state, sought to define and institute the types of markets that they (and not the citizenry) were convinced were the most advanced. In this contention, they were merely echoing Schmitt’s position that “only a strong state can preserve and enhance a free-market economy” and “only a strong state can generate genuine decentralization, [and] bring about free and autonomous domains” (quoted in Cristi 1998, 31, 34n7). This notion was echoed (without attribution) by Hayek: “If we proceeded on the assumption that only the exercises of freedom that the majority will practice are important, we would be certain to create a stagnant society with all the characteristics of unfreedom” (Hayek 1960, 32). — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 2145 (#corroborates, via linked claim)

These early writings all made the explicit admission that classical theory had underestimated the necessity of a state taking active measures in ideal market economies, combined with scathing attacks on the actual political system of the Weimar Republic. It was largely the tendency toward the so-called Wirtschaftsstaat (Eucken’s “economic state”) that was harshly criticized and blamed for shifting political and economic power to various organized interests. Owing to the rise of powerful special interests, the state was considered the easy prey of political parties (“Staat als Beute”: Rüstow 1932, 171). As a consequence, the state was rendered incapable of acting independently for the larger good, at least according to the early ordoliberals. They argued in favor of resurrecting the classical liberal dualism of state and society, but conceived of the need for a positive state authority superior to all the powers present in society. To posit “independent” state authority favorable to the functioning of the market thus required an active role in institutional design, one that resembles the subsequent efforts of public choice theory and rational choice-based neo-institutionalism. — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 524 (#corroborates, via linked claim)

Their goal was not to give the state an active role in defending free enterprise, but on the contrary, to produce a full-bore reinstatement of laissez-faire economics. Whereas during the 1930s, the French neoliberals rejected the works of the classical liberals such as Frédéric Bastiat or Gustave de Molinari, because for many they meant “laisser souffrir,” these authors turned out to be central for the new generation, in conjunction with American libertarian spokesmen. — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 300 (#qualifies, via linked claim)

Categorization

• XREF: connects to: Early liberals shared an unresolved ambivalence about the state that seeded austerity — Mark Blyth, Austerity: The History of a Dangerous…, 269; Early free-market economists legitimized some government intervention; later ones did not — Angus Burgin, The Great Persuasion: Reinventing Free…, 375; Neoliberals rejected planning yet immediately designed world-scale institutional blueprints. — Quinn Slobodian, Globalists: The End of Empire and the…, 398 (+29 more)

Related

• The newer French neoliberals abandoned the state’s active role for full laissez-faire (similarity 0.87)
• Early neoliberalism rejected laissez-faire in favor of a state-built competitive order. (similarity 0.87)
• Early ordoliberalism demanded a strong independent state to counter organized interests (similarity 0.86)
• Neoliberalism centered on a strong state, not the classical night-watchman state (similarity 0.85)
• Early neoliberals explicitly distanced themselves from classical laissez-faire doctrine (similarity 0.85)
• Neoliberals pursued an engineered order rather than expecting free markets to emerge naturally (similarity 0.85)
• Early neoliberals attacked economism rather than reducing life to economics. (similarity 0.85)
• Neoliberals do not practice the laissez-faire they preach to the public. (similarity 0.85)
• French neoliberalism emerged from the double discrediting of classical liberalism and socialist planning. (similarity 0.84)
• Neoliberalism rejects laissez-faire in favor of perpetual constructionist state intervention (similarity 0.84)
• Neoliberalism endorses wide state action to construct markets, not laissez-faire. (similarity 0.83)
• Milton Friedman’s 1951 manifesto defined neoliberalism as a competitive order requiring an active state. (similarity 0.83)
• Neoliberalism’s purported state-skepticism actually mandates a strong state (similarity 0.83)
• Neoliberalism is an interventionist flexible policy approach, not a laissez-faire orthodoxy (similarity 0.83)
• Interwar neoliberals broke with laissez-faire empiricism to build a conventionalist science of liberalism (similarity 0.83)

Broader Connections

• Neoliberalism centered on a strong state, not the classical night-watchman state #corroborates (0.95) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 2145
• Early ordoliberalism demanded a strong independent state to counter organized interests #corroborates (0.92) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 524
• The newer French neoliberals abandoned the state’s active role for full laissez-faire #qualifies (0.85) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 300
• Neoliberals pursued an engineered order rather than expecting free markets to emerge naturally #expands (0.85) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1907
• Neoliberalism broke sharply with prewar classical liberalism rather than continuing it #expands (0.80) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 778