Law & Neoliberalism

David Singh Grewal and Jedediah Purdy –

Neoliberalism is an indispensable term for making sense of the legal, political, and ideological conflicts of the moment, and also one of the most maligned. Liberals who feel criticized by it have insisted so often and so loudly on its uselessness that even those on the left who use it often seem compelled to apologize as they do so, to distance themselves from all its other uses and users. People thus use the term in the very conditions it should work to criticize: isolated, idiosyncratic, mutually mistrustful, and “entrepreneurial.”

The term matters because it names key strategies in one of the major conflicts of the time: the struggle between democratic claims on economic life, usually on behalf of the security and autonomy of workers and other “ordinary” people, and the claims of capital and management: for higher profit, greater capital mobility, the subjection of non-market practices to market logic (from childrearing to universities to the professions), and “freedom to manage” through “labor flexibility.” To use the term, in the early twenty-first century, is generally to acknowledge the lines of this conflict, and often to take sides. For this reason, it is often discomforting to anyone whose view of the social and legal worlds is fundamentally conciliatory – Make the pie bigger through overall efficiency! – or organized by a different division, such as good Democrats versus wicked Republicans, or responsible conservatives versus heedless liberals.

If you are looking to identify neoliberal forms of argument, look first for four overlapping kinds of claims. The first and simplest is an efficiency-based view, sometimes called (by its critics) “market fundamentalism,” holding that strong property rights and private contracting are the best means to increase overall welfare, and that law should promote these except when it intervenes to “correct market failures.” Second is a more explicitly moral line of argument (though of course promoting overall welfare is an intensely moral project) that property and markets best protect the freedom and dignity of individuals, so a market society is the most decent social order possible. The third line of argument adopts a tragic register to deny that democratic politics and public institutions can ever successfully discipline and shape economic life. This pessimistic position tends to serve as a backstop when it is clear that market arrangements are failing to deliver overall welfare – because of intermittent crises and runaway inequality, let us say. “That may be so,” the neoliberal argument now runs, “but the alternatives are always worse – corruption, abuse of power, utopian tyrannies.” The last line of argument is the subtlest, often implicit, and also often the most important: the exclusion of certain kinds of ideas and proposals from any place at the table.

Neoliberalism is often, and unhelpfully, identified with simple “deregulation.” In fact, neoliberal arguments may bolster several kinds of policy postures: a roll-out of market-style governance, for instance, in labor relations or health-insurance exchanges; a roll-back of existing, non-market regulations (“deregulation”); a defense of existing market arrangements against non-market imperatives (“anti-regulation”); or in a less tactical ideological posture, as a general account of legal regimes and their purpose. In the last vein, one might consider the framing effect of introducing law students in their training to the “Coase theorem,” which invites them, in effect, to imagine a world in which everything is for sale and actually gets sold, and then to treat that world as a heuristic utopia. From then on in their education, they are cued to ask, “How might this law be a barrier to comprehensive market exchanges, and might we dismantle the barrier?” Although law professors frequently hem in their Coase sessions with caveats, the prompt retains its grip. Imagine asking, instead or in addition, what a legal world of equals would look like, with genuine mutuality its rule of cooperation, and how any portion of law blocks us off from that world and might be overcome.

Another reason not to identify neoliberalism with “deregulation” is that this formulation suggests that markets are a natural or default social arrangement, non-market “regulation” an overlay that might be stripped away to reveal the abiding market order beneath. But that is quite wrong; both historically and conceptually, markets follow and take their shape from political and legal decisions defining and assigning rights of property, contract, incorporation, investment, etc. There is no pre-existing and subsisting market that could count as the alternative to regulation; rather, there are forms of legally constituted economic order, some deploying markets extensively as policy tools, others limiting them, with “market” in each case taking its operational meaning from a set of legal building-blocks. Although the most sophisticated forms of neoliberalism (such as Friedrich Hayek’s legal theory and state-centered German ordoliberalism) do not, in fact, claim that markets arise spontaneously outside of law, the political uses of neoliberalism converge on the idea that “there is no alternative” outside the binary of “market” and “regulation.”

What do neoliberal arguments look like in practice? Broadly speaking, they treat market-modeled transactions as normative – natural, obviously desirable, self-evidently the sort of thing the Constitution protects, etc. – and abstract away from considerations of distribution and attention to competing values, especially democratic ones. So, you might notice that you are invited to consider the Coase theorem throughout law school, but not an equally utopian image of egalitarianism. You might observe the ease with which the Supreme Court extends protection of free speech to spending money, first in political campaigns, then in advertising and even transfers of marketing data with no evident relation to public debate, let alone to any clear conception of what role democratic decisions ought to play in balancing and controlling, rather than channeling, concentrations of private wealth. You might notice how little attention the abortion-rights portion of your constitutional law class pays to cases permitting Congress to prohibit public spending on abortions, or to the larger question (to which these policies are central) of how meaningful the right can be in the absence of a medical infrastructure in which to exercise it. You might ask how the field of antitrust came to be dominated by wealth-maximizing efficiency analysis when it was historically rooted in a conception of the way that productive capital and other economic power and roles should be distributed among members of a democracy.

Neoliberal arguments are not necessarily coded in legal culture as right-wing or as “about the economy.” Sometimes, instead, they carry forward “public-law” values of freedom and equality in ways that are indifferent to the context of political economy. An urgent and genuine defense of abortion rights may be desperately incomplete if it takes the Supreme Court’s cues and ignores the dimension of medical infrastructure. A poetic invocation of the principle of Brown v. Board of Education may translate into a constitutional ban on the government’s taking account of structural inequality in formulating race-conscious policies. A poetic account of the dignity of democracy may conclude by insisting that unlimited campaign spending confirms that the people rule. (These examples are not invented.) Neoliberalism doesn’t replace public-law or even “progressive” commitments with economic reductionism, but instead bolsters versions of these commitments that tend to neglect the deeper logic of law’s involvement in political economy.

There are often powerful, elegant, or simply very interesting arguments for neoliberal positions, from Hayek’s account of law as a kind of information-processing system for economic life to the doctrinal steps involved in extending free-speech protection to campaign spending. Nothing here is intended to suggest that calling these examples “neoliberalism” could be an excuse for not paying them close attention and trying to learn from them. But these forms of argument and habits of thought have been extremely powerful in legal practice, scholarship, and teaching. Identifying neoliberalism as a form of legal reasoning is a way of getting to grips with the law’s under-engagement with themes of political economy: the ways that economic and political life are mutually shaped by the medium of law, and always involve competing ways of balancing or integrating competing conceptions of efficiency, democracy, liberty, equality, and so forth. The family of arguments that we are calling neoliberal should be understood as interested participants in this inevitable contest, not as rising above it or providing the only possible terms in which to conduct it. Stepping outside neoliberal arguments can be an essential first step in imagining the law and political economy of a democratic society of equals.

David Singh Grewal is a Professor of Law at Yale Law School. Jedediah Purdy is the Robinson O. Everett Professor of Law at Duke Law School. 

5 responses

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