The socialist roots of neoliberalism

Is neoclassical economics neoliberal? ? With the help of extensive archival work and interviews in Hungary, the former Yugoslavia, Italy and the United States, as well as a patient and detailed reading of numerous economic works, Johanna Bockman , Associate Professor to the George Mason University in Virginia, makes an original contribution to the debates on the political uses of economic knowledge, and thus contributes to a Sociology of Economics which has developed strongly in the last ten years, taking advantage of the space opened up by the marginalization, within university programs, of the traditional “ history of economic thought “. The author shows that the association of neoclassical thought/neoliberal thought arises from a misunderstanding linked to a misunderstanding of the debates within economic science and to a reading grid of controversies between economists which positions the latter along an axis pro-state/pro-market. Questioning the classic dichotomies in which economic science is often confined (socialism v/capitalism, planning v/market, Keynesianism v/monetarism, etc.) thus allows Johanna Bockman to resurrect a series of economic models defining and evaluating economics. effectiveness of socialist market regimes, and to revisit the history of neoliberal transitions in Eastern Europe, emphasizing the role of “ liminal spaces » where new forms of economic knowledge circulate and are updated.

Market, State and institutions

Market, capitalism, standard economics: these three categories are neither identifiable nor synonymous, argues Bockman. On the contrary: neoclassical theory provided a language and a method for thinking and modeling both the market economy and the planned economy, private property and public or collective property, capitalist systems and socialist systems . The interest of neoclassical economists in planned economy models originated, according to Bockman, in the economic debates of the 1890s, with certain economists such as Vilfredo Pareto or Enrico Barone showing that in theory a socialist regime could be just as effective than a capitalist regime if prices are set by a specific system of equations – the resolution of which is, however, almost impossible. Strongly questioned by Ludwig von Mises in the early 1920s, this position will give rise to an abundant literature on the comparative effectiveness of capitalist and socialist systems. Bockman also notes that some neoclassical economists use socialist state models as a methodological tool providing them with results applicable to market economies, even though most of them contest socialism as a political doctrine.

The Bolshevik revolution brought a new wave of reflection on the plurality of forms of socialism from the 1920s. Certain Austrian and German socialist economists (notably Eduard Heimann, Carl Landauer, Emil Lederer, Franz Oppenheimer) then criticized the Soviet planning model and call for the establishment of a socialism based on the self-management of businesses and their competition on a free market. In 1936, Oskar Lange, a Polish economist, defined a model of “ market socialism » in which a State planner and owner of the means of production sets prices using market mechanisms, and shows that the allocation of goods is then more efficient than in a capitalist economy – the model will serve as a basis for numerous discussions between economists in the post-war period. The experimentation with alternative forms of socialism to the Soviet model in Eastern Europe after the death of Stalin reactivates and renews these debates: Bockman focuses especially on Yugoslav self-management and on “ goulash socialism » in Hungary (more particularly, on the “ New economic mechanism » launched in Hungary in 1968, which transformed the operation of the plan and liberalized certain prices). It shows that these experiments (unfinished and incomplete as they may be) are based on, and in return stimulate, the development of theoretical economic models: Benjamin Ward’s Illyrian firm, Jaroslav Vanek’s modeling of the Yugoslav economy, the exploration of market and incentive mechanisms (mechanism design) by Hungarian economists in the 1950s and 1960s.

Therefore, Bockman argues, what divides economists is not so much a divide between interventionism and free markets as a debate over optimal institutional arrangements. More specifically, she notes, economists are interested in the type of institutions required for the optimal functioning of the walkand are positioned along an axis of authoritarian and centralized institutions / democratic institutions. At the first pole, the defenders of imperative planning, of a strong or even authoritarian State, of monopolistic firms, of the power of managers and shareholders ; at the second pole, the proponents of self-management, cooperatives, the autonomy of businesses vis-à-vis the State, the supporters of anti-trust laws, the power of stakeholders within companies. And if these institutional divisions have been forgotten, indicates Bockman, it is due to the ideological production work of conservative organizations, which have used the market/State axis to make alternative models unclassifiable – and therefore invisible, notably those of market socialism. If the deconstruction of the categories of State and market and the highlighting of institutions gain support, we can nevertheless regret that the new method of classification of economic theories proposed by Bockman is not more precise, and does not distinguish between types of institutions in question (the forms of property rights, the mode of governance of firms, competition policies, etc.) and their articulations – the categories of “ authoritarian institution » and “ democratic institution » would thus themselves have to be deconstructed and exploded.

Liminal spaces, circulation and appropriation of economic knowledge

By breaking down the confusion between neoclassical economics and capitalism, Bockman also intends to reassess the place of the Eastern bloc in the development of economic thought. Neither neoclassical economics nor neoliberal ideology, she indicates, are pure American export products: they were developed within “ liminal spaces » of which the economists of the East were largely a part, and in which they participated equipped with their own theoretical weapons. Over the course of several chapters, she describes the emergence of transnational networks within which economic knowledge and its conditions of possibility circulate from the mid-1950s, under the auspices of the death of Stalin and the end of McCarthyism. In 1958, the Lacy-Zarubin agreement authorized regular academic exchanges between the Soviet Union and the United States, and the Ford and Rockefeller foundations financed exchange programs with Poland and Yugoslavia from 1957, prioritizing requests for economists. The proximity between certain Soviet economic research agendas and those of American researchers, on linear programming,input-output and planning, makes certain international conferences successful (in particular those of Wassily Leontief), and, despite numerous political and diplomatic difficulties, makes certain sustained dialogues possible (in particular between Tjalling Koopmans and Leonid Kantorovich, co-Nobel prize in 1975 ). Following stays at prestigious American universities where they were able to rub shoulders with specialists in comparative economics and thinkers of market socialism, certain Yugoslav economists are working to import American neoclassical economics into their country of origin. : they translated Samuelson’s flagship manual, wrote their own summaries, introduced microeconomics within economics faculties. In Hungary, the arrival to power of Imre Nagy in 1953 opened a period of professionalization of the economic discipline and reorientation of research towards mathematical techniques, creating the conditions for an importation of American neoclassical economics. Bockman devotes a fascinating chapter to the analysis of one of the places of circulation of economic knowledge, the CESES (Center for the Study of Economic and Social Problems) of Milan, active from 1964 to 1988, founded by a business interest group to counter the Italian Communist Party, but in fact welcoming individuals with very different political convictions and backgrounds – former communists, socialists hostile to theUSSRlibertarians, anarchists, refugees from Eastern Europe, American researchers close to the New Right – who make the structure a space for discussion of socialist experiences and the passage of market socialist thought.

From socialisms… to neoliberalism ?

The existence of these transnational networks where microeconomic knowledge circulates and where socialist alternatives are developed allows Bockman to return to the speed of the neoliberal transition in the countries of Eastern Europe in 1989. Because, he says -she, from experiences of market socialism to neoliberalism, there is only one step easily taken by certain technocrats. “ Neoliberalism therefore has socialist origins » she writes (p. 218): the assertion is only understandable if we return to the definition she adopts of neoliberalism, which she indicates is drawn from debates on neoliberal transitions in Eastern Europe in the 1990s (p. 4), and which includes four elements – competitive markets, an authoritarian state guaranteeing the proper functioning of markets (smaller, authoritarian state)a hierarchical or even shareholder model of corporate governance (hierarchical firms, management, and owners), a capitalist economy. From then on, the market socialists of Eastern Europe, defenders of authoritarian regulatory institutions (notably the planners) would have had little difficulty in converting to neoliberalism, because it “ would have been enough » to replace an administrative mode of setting prices with market mechanisms. This conversion would be all the easier since certain economists were able to see in the neoliberal model a means of accessing the state apparatus and consolidating their power by guiding the transition.

If Bockman highlights the intellectual conditions of possibility of neoliberal transitions in Eastern Europe (the elites would only have had to “ distort » a pre-existing model), it barely questions the social conditions: which elites and economists are taking up neoliberal ideas ? How to understand the formation of alliances between different social groups in access to power ? On the socio-political configurations, power relationships and relative positions of stakeholders, the reader will be left wanting more. This should not, however, distract from a work which, by brilliantly immersing the reader in more than a century of economic debates and by revealing the mechanisms and places of circulation and reappropriation of knowledge, allows us to think differently about knowledge. economic and thus constitutes an original and abundant contribution to the analyzes of the diffusion of neoliberalism.