Chapter Ten Friedrich Hayek and the Ideological Dispositif of Neoliberalism

‘If money, according to Augier, “comes into the world with a congenital blood-stain on one cheek”, capital comes dripping from head to toe, from every pore, with blood and dirt’, wrote Marx in the chapter of Cap- ital entitled ‘so-called primitive accumulation’.1 It is no exaggeration to apply this statement to the emergence of neoliberalism as well, whose economic doctrine was first put into practice within the framework of Chile’s military dictatorship under Pinochet. Shortly after the putsch in 1973, the neoliberal economists around Milton Friedman and Arnold Harberger, the so-called ‘Chicago boys’, sent the generals their proposals for new economic policies, which were then realised in shock-therapy from 1975 onwards. After around 1978, another neoliberal tendency, the ‘Virginia School’ or ‘Public-Choice-School’ around James M. Buchanan and Gordon Tullock became predominant – a school which was mainly concerned with the ‘marketisation’ of the state.2 From 1975 onwards, Friedrich A. Hayek was in regular contact with Chilean government- circles. Personally welcomed by Pinochet in 1977, he had a significant influence on the Chilean dictator- ship’s new constitution in 1980, whose title ‘Constitu- tion of Liberty’ was allegedly adopted from Hayek’s 1960 book of the same name.3

1. Marx 1976, pp. 925–6. 2. Cf. Walpen and Plehwe 2001, pp. 45 et sqq., 56–7. 3. Walpen and Plehwe 2001, pp. 60–1. Hayek declared in a 1981 interview that he did not ‘know of any totalitarian governments in Latin America. The only one was Chile 272 • Chapter Ten

10.1. The formation of neoliberal hegemony Neoliberalism has become the general designation for economic policies that claim to realise a market-order that is ‘free’ from government-interference, espe- cially from any attempt to redistribute wealth to the benefit of the lower classes or marginalised groups. Its proponents advocate the dismantling of the welfare- state, the deregulation of labour-relations and the weakening of trade-unions’ bargaining power, all in the name of a ‘free-market society’ and its entrepre- neurial spirit, both of which are in danger of being stifled by a patronising state- bureaucracy. Proclaiming ‘individual freedom’, neoliberalism proposes to bring all human actions and desires into the domain of the market, since it considers market-exchange to be an ‘ethic in itself’, capable of substituting for all previ- ously held ethical beliefs.4 The term ‘neoliberalism’ goes back to an international conference of liberal economists in 1938 in Paris on the occasion of the French translation of the book The Good Society (1937), written by the philosopher and New Deal critic Walter Lippmann. Among other things, the discussions dealt with the question of how to wage an ‘international crusade for a constructive liberalism’, which would be clearly distinguished from the failed ‘Manchester liberalism’.5 A slight majority finally decided to choose the term ‘néo-liberalisme’ for the intended new forma- tion, over against competing terms like ‘néo-capitalisme’, ‘libéralisme positif ’ and even ‘libéralisme social’ or ‘libéralisme de gauche’.6 Notwithstanding the different tendencies, two commonalities could be identified from the outset, namely a rejection of any ‘collectivism’, which comprised not only communism and social- ism, but also Keynesianism and the class-compromise of the Fordist welfare-state, and secondly, against the ‘narrow economic conception’ of classical liberalism, a stronger emphasis on the state, which, according to Hayek, had the task of establishing and securing market-competition as the organising principle of the economy.7 The goal was a ‘liberal interventionism’, which does not intervene ‘against market-laws, but in the direction of market-laws’.8 As Otto Graf Lambs- dorff highlighted in his introduction to the new German edition of Hayek’s Road to Serfdom, the neoliberal doctrine is not about competition alone, but about a ‘competition order to be set up by the state’.9 This self-definition provides a first under Allende. Chile is now a great success. The world shall come to regard the recovery of Chile as one of the great economic miracles of our time’. (Quoted in Ebenstein 2003, p. 300) 4. Cf. Harvey 2005, p. 3. 5. Cf. Walpen 2004, pp. 56–7. 6. Walpen 2004, p. 60. 7. Cf. Walpen 2004, pp. 58, 64. 8. Röpke, quoted in Walpen 2004, p. 70. 9. In Hayek 1994b, p. 12.