William Davies · Madman Economics: What the hell is going on? · LRB 20 October 2022 – London Review of Books

by | Oct 10, 2022 | Financial

From​ the 1920s until the 1990s, as Quinn Slobodian describes in Globalists (2018), his history of neoliberal thought, Austrian and German free-market thinkers had a common ideal of legally ‘encasing’ the market, in order to leave it safe from political harm. Price signals could be compared with an electrical current flowing down copper wires at lightning speed. To function effectively and safely, the wires must be sealed in plastic, thus protecting them from external interference. As Slobodian shows, after 1945 this legal encasement was attempted through the establishment of international regulators and trade areas, such as the European Economic Community, which placed key areas of economic policy – the defence of property rights and competition, for example – outside national political control and insulated them from democratic interference. What were these intellectuals so afraid of? Principally, it was the threat that socialists might usurp the spontaneous logic of the market with national economic plans. Such figures as Friedrich von Hayek saw the spectre of socialism everywhere. But there was also the threat from nationalism, especially in the formerly colonised territories that won independence in the postwar period. The risk, as early neoliberals perceived it, was that the retreat of empire would open up space for national economic projects oblivious to the merits of capitalism or the free market. But if the market could become a global institution, defended by law, then no degree of national, democratic autonomy would enable its discipline to be escaped. This project of market encasement had its greatest successes in the quarter-century between the collapse of state socialism and the populist triumphs that disrupted Europe and US politics in the mid-2010s. The European Union …

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