Contending Liberalisms in World Politics: Ideology and Power 9781685854997

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CONTENDING LIBERALISMS IN WORLD POLITICS

CONTENDING LIBERALISMS IN WORLD POLITICS IDEOLOGY AND POWER

Ja mes L. Richardson

LYN N E RIENNER PUBLISHERS

B O U L D E R L O N D O N

Published in the United States of America in 2001 by Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301 www.rienner.com and in the United Kingdom by Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU © 2001 by Lynne Rienner Publishers, Inc. All rights reserved

Library of Congress Cataloging-in-Publication Data Richardson, J. L. (James L.), 1933— Contending liberalisms in world politics : ideology and power / James L. Richardson, p. cm. Includes bibliographical references and index. ISBN 1-55587-915-2 (alk. paper) ISBN 1-55587-939-X (pbk. : alk. paper) 1. Liberalism. 2. Globalization. 3. International relations. I. Title. JC574.R53 2001 327.1'01—dc21 2001019098 British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library.

Printed and bound in the United States of America

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The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1984. 5

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CONTENTS

Acknowledgments 1

Vil 1

Introduction

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2 Theoretical O r i e n t a t i o n

Current International Relations Theory, 7 Origins of the Study, 10 Theoretical Premises, 13 17

3 Contending Liberalisms

The Concept of Liberalism, 17 First Phase: Elitism vs. Democracy, 21 Second Phase: Laissez-Faire vs. Social Liberalism, 32 Third Phase: Toward Inclusive Liberalism? 45 Conclusion, 49 4 Liberalism in International Relations

From the Enlightenment to the League of Nations, 56 Liberalism vs. Realism, 65 Contemporary Liberal International Relations Theory, 71 Contemporary Liberal Ideology, 85 Conclusion, 90

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CONTENTS

5 Neoliberalism in Practice

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Neoliberalism and Globalization, 94 Neoliberalism and Western Societies, 101 Development and Deprivation, 113 Human Rights and Democracy, 124 Conclusion, 131 6 Forces Sustaining Neoliberal Ideology

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Changing Coalitions, 136 The United States: Values and Power, 145 Neoliberal Economics, 153 Conclusion, 169 7 T h e Search for Alternatives: Forces for Change

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Conceptualizing Forces for Change, 175 Contesting the Forces Sustaining Neoliberalism, 180 Constructing Alternatives, 192 Conclusion, 202 8 Conclusion

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References Index About the Book

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ACKNOWLEDGMENTS

The ideas for this book began to take shape in the mid-1990s, in Canberra and during a period of study leave at the Centre for International Studies at the London School of Economics. It was written mainly in Canberra but completed in Hamburg. Australia's unique combination of assets and vulnerabilities makes it a good vantage point for examining the drive by the globally powerful to establish a certain kind of international order—the "neoliberal." The governing Australian elites became zealous converts to neoliberalism, and the Australian universities were among the minor casualties of an ideological offensive that exposed the fragility of academic traditions seemingly well established in Western societies. Nonetheless, the Australian National University's Department of International Relations retained sufficient autonomy to support projects such as this one. Its members shared a keen interest in coming to terms with the momentous changes in world politics that resulted not only from the ending of the Cold War but also from the confluence of longterm developments that came to be referred to as globalization. Discussion of these issues was constantly enriched by a stream of international visitors to the university. My initial struggles with these questions led to a refocusing of my interests away from international security studies toward international political economy and the study of ideology, political culture, and political thought. During the long process of transforming questions into papers, and some of these into chapter drafts, colleagues and visitors offered invaluable comments on my early efforts or suggestions that sharpened my awareness of many aspects of the topic. I would like to vii

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thank Hayward Alker, Greg Fry, Jim George, Stuart Harris, Paul Keal, Richard Leaver, Andrew Mack, John Ravenhill, Chris Reus-Smit, Ann Tickner, and Peter Van Ness for their comments and suggestions. The department's graduate students also provided a host of questions and suggestions—more than I could respond to in this project. I am especially grateful for the searching comments of those who read the manuscript as a whole: Ian Bell, Ursula Vollerthun, and the publisher's two reviewers. I have responded as fully as possible, even though some of their suggestions, too, have had to be deferred for another occasion. Papers relating to the project benefited from discussion in seminars at ANU's Department of International Relations, the Australian Defence Force Academy, the University of Kent at Canterbury, and the London School of Economics, at a conference at La Trobe University, and at the joint conference of the International Studies Association and the Japanese Association of International Relations in Makuhari. I would like to thank the participants, especially those who organized these meetings. The Department of International Relations continued to support the project after my move to Germany. I am most grateful to the then head of department, John Ravenhill, and to Beverley Fraser, who processed successive drafts and revisions of the manuscript with the same efficiency and good humor, irrespective of my location. My greatest debt is personal as well as intellectual. Ursula Vollerthun has supported the author and project throughout—a source of ideas as well as a critical reader, always with a keen eye for detail but never losing sight of the whole. Some passages in Chapters 3 and 4 are drawn from a previous publication. They are reprinted by permission of Sage Publications Limited from James L. Richardson, "Contending Liberalisms: Past and Present," European Journal of International Relations, Vol. 3, March 1977.

1 INTRODUCTION

The ending of the Cold War prompted a lively debate on the opportunities and dangers that were unexpectedly opened up and on the nature of the new international milieu. There was a flurry of colorful images: "the end of history," "a borderless world," "the clash of civilizations," and "global apartheid," to name only some of the most dramatic. They were polarized between extremes of optimism and pessimism: on the one hand, unparalleled peace and prosperity; on the other, genocide and environmental catastrophe. Few, however, really assumed that the future was predetermined, and the leading Western governments sought to establish ground rules for a new kind of international order they hoped would enable them to keep developments under control. The purpose of this book is to examine the nature and prospects of that projected order. It is depicted as the realization of the liberal vision of a world of peaceful democracies, but the means by which it is being constructed, day by day, are economic: the rules policed by international institutions in which Western governments have the controlling voice, in particular the International Monetary Fund, the World Bank, and the World Trade Organization. This is without historical precedent: earlier attempts to establish international order relied mainly on political and military means, the economic remaining in the background. The ideology that guides and justifies this world order project is commonly referred to as neoliberal. As a first approximation it may be described as one that privileges markets over governments and proclaims the need for societies to adjust, apparently without limit, to the supposed imperatives of globalization. The ideology is uncompromisingly universalist; the same norms apply to all, irrespective of a coun-

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try's particular institutions, cultural traditions, or state of development. Among its orthodoxies are freedom of trade and capital flows, deregulation, privatization, and, more recently, appropriate (and universal) norms of "governance." There is no place for governmental "intervention" in the market. It is not only antiglobalization protesters, however, who question the equity of rules that, while permitting extraordinarily generous rewards to the elites, place the whole burden and risk of adjustment to change on the shoulders of the disadvantaged and do little or nothing to alleviate the condition of the vast numbers who lack the bare minimum for subsistence. There are many critiques of neoliberalism, but there has been little study of its implications for international order. Surprisingly, neither of the currently predominant international relations theories—realism and liberalism—has prompted extensive inquiry into the neoliberal project. 1 Only one theoretical approach has done so—the "neo-Gramscian." This study is indebted to the neo-Gramscian analysis of the forces behind neoliberalism, but its theoretical perspective is different: a critical engagement with neoliberalism from within liberalism itself. Like other major political traditions, liberalism incorporates a plurality of values, among which are significant tensions that prompt continuing debate. A basic premise of this study is that the normative tensions within liberalism provide room for a wide-ranging critique of the neoliberal project and for formulating liberal alternatives to it. The argument, in a nutshell, is that at a time when the ending of the Cold War opened up a vast potential for movement toward realizing the liberal vision worldwide—freedom and a better life for all—the ruling doctrine seeks to construct an order that in practice enhances inequalities, perpetuates inhuman deprivation, and offers a scaled-down version of liberalism and democracy. The starting point is not contemporary liberal international relations theory, with its concern to establish itself as an empirical social science, but the history of liberal political thought, focusing on the normative issues between different strands of liberalism—in particular between elitist and radical liberalisms—that have been constantly debated in changing historical contexts. Some readers may need no persuading that a critique of neoliberalism should be grounded historically. How else might its distinctive features within the spectrum of liberal viewpoints be delineated? How else could it be demonstrated that more humane and equitable alternatives are available within the liberal tradition than by showing they have been present in liberal debates throughout—

INTRODUCTION

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sometimes translated into practice, sometimes not? Other readers, however, may require further justification of the historical approach. An alternative way to delineate differences would be the philosophical. The philosophical foundations of liberal thought have indeed been extraordinarily diverse; it suffices to mention Locke, Bentham, Kant, and Hegel, or Rawls, Hayek, and Berlin. The problem, however, is not just that this would seek to explain the relatively familiar through the complex and unfamiliar; more important, it would not be suited to the purposes of this study. It would not be helpful as a way of showing the relationship between different strands of liberal theory and political practice, because many of the philosophical texts are open to varying readings so far as their practical policy implications are concerned. Typically, theories are involved in policy debates in simplified versions—"ideologies." Historical narrative, rather than philosophical analysis, can best show how different strands of liberal theory, often by way of ideological simplification, have provided guidelines and justifications for differing policies. A further advantage of the historical approach is that it can serve to "locate" neoliberalism by reference to analogous doctrines in earlier periods. Its resemblance to nineteenth-century laissez-faire is especially instructive as are certain, less familiar differences. It is more constrained in some respects but in others more far-reaching, and, like laissez-faire, it provokes strong reactions. In the nineteenth century these sometimes took a relatively peaceful form, as in Britain where T. H. Green's "new liberalism" foreshadowed the welfare state. But the response to the social unraveling occasioned by the unrestrained market could also take the violent forms of communism or fascism, as Karl Polanyi was to highlight in The Great Transformation. The loss of historical memory could lead to ignoring warning signals and repeating earlier disasters on a vaster scale. The neoliberal mindset appears to be especially prone to this danger; its commitment to a timeless, ahistorical version of economics goes along with the downgrading, if not outright suppression of historical experience. At a time when globalization is raising fundamental questions about the centrality of the state and the traditional dichotomy between the "internal" and the "external," it is not surprising that neoliberalism should provoke debates over internal as much as international politics. Indeed, as many students of international relations are insisting, any rigid separation of the two is becoming increasingly difficult to sustain. For example, international organizations now influence the policies of

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states on a wide range of issues; once deemed a Utopian liberal idea, this has become part of everyday experience. Neoliberalism makes no major distinction between the domestic and the external: it is a design for the internal as much as the international or, for that matter, the "global" political economy.2 The argument proceeds as follows: the following chapter is essentially a response to the scholarly injunction that an author's presuppositions should be made explicit. It begins by commenting on the present state of international relations theory, goes on to show how the work originated in debates on the nature of the post-Cold War international order, and concludes by setting out some basic theoretical premises identifying the author's standpoint within the liberal tradition. These preliminaries are not argued in any detail but provide background for the argument that follows. The foundation for that argument is provided in Chapter 3, the historical interpretation of contending liberalisms. It focuses on the tension between elitism and radicalism in liberal thought and practice from the seventeenth century to the present. The terminology has changed along with the historical context, but the underlying tension has remained the same. Initially a relatively straightforward opposition between elitism and egalitarianism/democracy, since the Industrial Revolution it has taken the form of a struggle between laissez-faire and social liberalism, and more recently there are new radical claims and theories for which the term inclusive liberalism may be appropriate. It is argued that only the radical strand embodied the full range of liberal values, but it was often subordinated to elitist liberalism, the narrowness of whose values was offset by its favorable position in successive power hierarchies. Chapter 4 turns to liberalism in international relations, which is also presented historically. The clash between contending liberalisms does not provide the same focus, although it is present in more subtle forms. Until recently it was overshadowed by liberalism's struggle against "realist" practices and theories, which may account for the empirical emphasis in contemporary liberal theory as it seeks to shake off the image of "utopianism." Normative liberal theory attracts less attention, but it nonetheless offers a radical challenge to neoliberal ideology. Chapter 5 examines the practical consequences of neoliberalism in two kinds of society: the affluent West and impoverished developing countries dependent on external (Western) support. It first contests the claim that neoliberal policies are necessitated by globalization. In the West, it is argued, these policies exacerbate the problems of the disad-

INTRODUCTION

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vantaged and also have far-reaching institutional and cultural effects. In the developing world, despite the recent softening of the approach of the World Bank, neoliberalism leads to continued neglect of the basic subsistence needs of some 20 percent of the world's people and offers little prospect of development, even in the longer run. The associated political goals—the promotion of human rights and democracy—are construed narrowly in order to deflect their potential challenge to the neoliberal project. Chapter 6 inquires into the forces sustaining neoliberal ideology. First, as neo-Gramscian analyses bring out, structural economic changes have brought to the fore a new transnational elite coalition whose orientation is to the global market, not national markets, and whose control over credit and investment constrains the policies of national governments. Second is the multidimensional influence of the United States, which not only enjoys geopolitical preponderance and unparalleled structural power in the international economy but also pervasive cultural influence. All this lends support to its particular version of liberalism—pragmatic but in the last analysis neoliberal. Third is the role of the economics profession. Despite a plurality of views in the discipline, most economists in key institutional positions, as well as the authoritative voices in the public debate, espouse neoliberal orthodoxy. Along with the narrowing of liberalism, there is a narrowing of economics and a powerful bias in favor of markets and against governments. Even the discipline's blind spot concerning power becomes an ideological asset, shielding the powerful from scrutiny. The thinking of Karl Polanyi and the neo-Gramscians provides the starting point for Chapter 7, which examines forces that could make for change and discusses some current views of a liberal alternative. It considers how each of the forces discussed in Chapter 6 might be countered, arguing that this requires attention to political culture and the contemporary role of the social sciences as well as to questions of political practice. It comments on some recent reformulations of social liberalism, suggesting that the most familiar of these, the "third way," concedes too much to neoliberalism and is too Western-oriented. Ideas expressed in the Human Development Reports of the United Nations Development Programme offer a more promising starting point. One major issue area not included is the environmental, despite its cardinal importance for the future of world order. Although the environmental agenda raises issues of liberal principle, it also raises many other issues, largely of a specialized kind with their own specialized literature. Adequate discussion of these would not only require lengthy addi-

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tions to the argument, but they would fall outside its scope: issues between contending liberal viewpoints. It is very likely that such a discussion would strengthen the case against neoliberalism, but this would be on other grounds. The book offers no prognosis but sees the future as open. In the short run, the forces making the continued ascendancy of neoliberalism are formidable, but the narrowness of its version of liberalism and the opposition it provokes render it unlikely that it can achieve the status of a legitimizing ideology for international order. The erosion or breakdown of the neoliberal project, however, does not automatically translate into the triumph of an alternative liberalism; as historical experience has shown, it could mean a more oppressive order or heightened levels of violence. Its transformation into a more humane and inclusive liberalism will require a greater level of commitment and political imagination, as well as more effective political action by its supporters, than have been present thus far during the neoliberal era.

NOTES 1. The main exception is the recent work of Richard Falk (1995 and 1999), which is discussed in Chapter 3. 2. The terms global and international, and also world order and international order, are used in this study to indicate differences in emphasis but not to signify a major conceptual distinction. In general, global or world are preferred by those who emphasize the extent to which the autonomy of states is now constrained by global "forces," networks, and so on, and international by those who emphasize the opposite, for example, that states remain the principal actors and that international institutions and regulations depend on the decisions of the major states.

2 THEORETICAL ORIENTATION

This chapter seeks to make clear the book's distinctive theoretical approach, including the assumptions and values underlying its argument. It first comments on some aspects of current international relations theory that are especially relevant to the approach, then shows how the book arose from the author's interest in the debates in the 1990s on the nature of the post-Cold War international order, outlining the steps that led to the definition of the issues and to the argument itself. Finally, it sets out some basic theoretical premises concerning order, liberal international relations theory, and the author's standpoint within one of the contending liberal traditions.

CURRENT INTERNATIONAL RELATIONS THEORY Since the 1980s theorizing has taken place within a context of debates over fundamentals—over what are often termed paradigms as well as "metatheory": epistemology and ontology. 1 First perceived by many as evidence of a discipline in crisis, this theorizing may better be regarded as indicating a social science that has reached a certain maturity and thus can accept the "essential contestability" of the philosophical foundations that underlie its varied research practices. Much theorizing proceeds with cognizance of these wider debates even if, as in this book, there is little explicit reference to them. The book is written, however, in the spirit of the postpositivist (or indeed prepositivist) view that normative issues are ever present in social scientific inquiry and are properly treated as central.

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Even if the general condition of methodological pluralism is viewed as "normal," however, there are more specific grounds for concern about the present state of international relations theory, including weighty criticisms from scholars in neighboring disciplines. International historian John L. Gaddis (1992/93), for example, claims that it cannot explain so central a contemporary development as the ending of the Cold War, and political scientist James Kurth (1998) makes the more sweeping charge that it offers little to the concerned public, or for that matter to policymakers, on the great issues of the day. It is easy to respond that such criticisms are overstated. It may be questioned whether it is reasonable to demand a single theoretical explanation of a complex process such as the ending of the Cold War any more than of its origins, or the origins or ending of any war. Historians tend to offer many and conflicting explanations of such developments; why should more be demanded of international relations theorists? Similarly, Kurth's strictures could be extended to other academic disciplines: which political theorists today, for example, write for a broad public? But such responses evade the nub of the criticisms. Gaddis exposed a genuine weakness: not only could the prevailing neorealist theory not readily account for the end of the Cold War, but emphasizing structural continuities as it did, it provided no framework to explain major structural change. Kurth's critique also identified a real problem—the discipline's preoccupation with specialized topics and its failure to engage with the "big questions" raised by contemporary world politics. It is remarkable, for example, how little international relations theorizing has addressed the world order concerns examined in this study. A more constructive response to Gaddis's critique can be seen in the readiness of international relations scholars to address that particular issue, the end of the Cold War, by bringing together theories from international relations and other disciplines, for example, theories of industrial society (Deudney and Ikenberry 1991—predating Gaddis's critique; Lebow and Risse-Kappen 1995). In such explanations international relations theories are indispensable but not self-sufficient. Studies such as these also overcome a related weakness in the discipline, the rigid separation between the external and the internal. The practical convenience, for authors no less than teachers, of separating internal politics from international relations has led to an unhealthy compartmentalization of thought that many are now seeking to overcome. This is proving difficult at the theoretical level, even though the

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theory of Robert Cox and the neo-Gramscian school constitutes a major exception. More-specialized studies in international political economy address the interconnectedness of the internal/external in specific contexts, an approach which is followed in this work. A concern of longer standing—the implications of the dominance of U.S. scholars within the discipline—was voiced by Stanley Hoffmann in "An American Social Science: International Relations" as early as 1977. His claim that the American discipline was "too close to the fire," too much shaped by the concerns of U.S. foreign policy, remains apposite. Arguably, this is less true at the level of theory than when Hoffmann was writing: the refinement of rational choice theory or the rather arcane debate between the neorealists and the liberal institutionalists (discussed in Chapter 4) suggest that theoretical inquiry has distanced itself from Washington's concerns, incidentally opening the way to critique from a different angle such as Kurth's. Yet in other respects, especially when viewed from outside the United States, the discipline remains as much an American social science as ever.2 It is not that paradigms such as realism and liberalism are peculiarly American, but the way in which theorizing proceeds within them strongly reflects U.S. values and perspectives. If American realist theory presupposes the vantage point of a hegemonic status quo power, this is no less true of current American liberal theorizing, which, moreover, in contrast to realism, reproduces themes deeply ingrained in U.S. political culture. The contemporary liberal international agenda, for example, is confidently presented as the realization of a distinctively American vision of world order, that of Woodrow Wilson (Kegley 1993). The enthusiasm with which U.S. international relations scholars espouse the theory of the democratic peace appears to be due to its consonance with longstanding liberal assumptions there and may be contrasted with a much more questioning approach to the theory elsewhere.3 More generally, liberal theory in the United States tends to assume that liberal norms and institutions are essentially benign and conducive to the good of peoples throughout the world. There is little awareness of the reservations elsewhere concerning the liberalism of the powerful; indeed, there is the characteristic liberal blind spot concerning power, especially the manner in which it is exercised in a liberal world. There is an unmistakable air of complacency, along with an uncritical reaffirmation of (certain) liberal norms. All this comes naturally within the U.S. political culture, where the basic tenets of liberalism have been so long unchallenged. The experience elsewhere, particularly in Europe,

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has been quite different: liberalism was always contested by other powerful ideologies and was on the defensive for much of the twentieth century. Outside the United States, liberal interpretations of international relations are advanced with a certain trepidation, with awareness of the many critiques to which liberalism has long been exposed, and "structural" as well as realist paradigms are taken seriously. From a nonAmerican standpoint the idea of a "critical liberal" approach to international relations theory is not problematic, whereas in the U.S. context it might appear incongruous or paradoxical. 4 Hoffmann (1977) looked to the regrounding of international relations in political theory as the most promising way to restore intellectual depth to a discipline too much swayed by contemporary fashions as well as short-term policy concerns. This author found it necessary, in order to bring out the significance of contending liberal positions in current world order debates, to place them in the context of the history of liberal thought. This is not, however, a work in political philosophy. It focuses on the link between theory and practice—on contending liberalisms as rival doctrines within the liberal tradition, seeking to bring into existence significantly different kinds of societies and different kinds of order, internal and international. It makes no claim to offer an outsider's neutral analysis but argues from a normative position within that tradition.

ORIGINS OF THE STUDY The study originated in the debates among international relations scholars, provoked by the ending of the Cold War, over the nature of the international system/order that might provide a new framework for the conduct of international relations. After an initial paper reviewing these debates, several subsequent papers took up the question whether those structural geopolitical continuities that (as the realist school saw it) imposed the same security imperatives in any system of independent states would remain the most fundamental determinants of any new order. I came to the conclusion that the weight of argument favored the view that the structural changes highlighted by liberal and certain other theories amounted to a systemic change. While the realist continuities had not disappeared, they seemed unlikely to amount to overriding structural imperatives. It was evident that the United States would be the central actor in

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the attempt to construct a new international order, and it was here that the main debates were taking place. The author compared the realist and liberal perspectives in these debates (Richardson 1994), concluding that the latter, and their highlighting of the political-economic dimension of order, now appeared the more relevant but suffered from serious limitations. These were discussed in "Problematic Paradigm" (1995), the first paper on liberalism as such, viewing it as an ideology guiding the construction of a certain kind of international order. The theme of divisions within liberalism was developed in a further paper (1997c). The shift of focus to the political-economic dimension of order reflected the view that the central structures of order are now to be found here, the military security system being reduced to a supporting role. The issues addressed in this series of papers may now be noted in greater detail. The initial survey revealed a multiplicity of viewpoints. Liberalism was not yet especially prominent nor—apart from the neorealists—was the explicit discussion of international relations theory. Confronting the neorealists were commentators of various persuasions for whom changes under way in the international system were more salient than the continuities highlighted in realist theory—changes such as the new ascendancy of economic issues and relationships or the perceived erosion of the sovereignty of the state. The paper noted especially acute differences over the role of the United States and pointed to the relative neglect of environmental and normative issues, in particular the issue of the legitimacy of any international order that might be constructed.5 The second paper, "The End of Geopolitics" (1993), took up the question whether international relationships were still subject to the structural imperatives of neorealist theory or whether, on the contrary, developments highlighted by liberal theory—the spread of democracy, the intensification of interdependence, the declining utility of force, and the erosion of the supremacy of the state—amounted to a systemic change so fundamental that international politics was becoming a new "game," subject to rules not yet clearly defined. While on balance supporting this latter view, the paper did not find current liberal prognoses convincing. For example, the projection of a peaceful liberal "core" and a warlike realist "periphery" was open to question along the lines of E. H. Carr's classic critique that the liberalism of the powerful neglected the consequences of unequal power in international relationships (1946, 75-88). A residual realism was necessary to perceive the full import of the policies of the major powers. The emerging system might well be

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one in which liberal economic and political norms serve the interests of the strong and wealthy; if so, the prospects would depend on whether those interests were perceived broadly or narrowly.6 The central importance of the U.S. role in the construction of any international order was taken up in "An American New World Order?" (Richardson 1994). American predominance was attributed not to a demonstrated requirement for hegemonic "leadership" but to the combination of America's unique geopolitical reach, economic strength, and cultural influence, on one hand, and the habits of deference and narrow preoccupations of the other major actors, on the other. The U.S. foreign policy community was seen as divided between two broad schools, realist and liberal, each with distinctively American characteristics. More significant than their many internal differences was that these schools defined the limits of U.S. foreign policy thinking. In the emerging post-Cold War system, liberalism appeared to have the stronger arguments, but it needed not only a realist corrective but stronger input from thinking outside the United States. As a legitimizing ideology, American liberalism fell short, due to its one-sided emphasis on market economics and free trade and its neglect of deprivation, economic rights, and ecological issues. In "Problematic Paradigm" (1995) liberal ideology came to be seen as a central issue in the construction of contemporary world order. The starting point was the widespread perception of a "world without alternatives," one in which there was no viable alternative to liberal democracy and the market economy, understood in a particular way. The current parameters of social choice were not the outcome of inexorable impersonal forces ("globalization") but were shaped by ideology—not liberalism per se but a particular version of it. The significance of different viewpoints within liberalism emerged most clearly from a historical survey. While the prevailing neoliberal doctrine with its suspicion of government and celebration of the market expressed certain core liberal ideas, it had long been contested within liberalism. Neoliberalism had led to a drastic narrowing of the post-Cold War agenda, and because of its subordination of the issues of deprivation, equity, and ecological sustainability, it was inadequate as a legitimizing ideology. The paper also drew attention to forces sustaining this paradigm and forces for change, thus completing a first sketch of the present argument. The account of the differences within liberalism was developed more fully in "Contending Liberalisms" (1997c), which outlined a succession of struggles between elitism and egalitarianism. Neoliberalism,

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the contemporary version of elitism, could be expected to confront the same barriers to achieving legitimacy as had previous variants of elitist liberalism: in essence, it offered too little to the great majority of the world's people. The consequences of its ascendancy in the context of globalization were examined, along with alternative liberal viewpoints. These tensions within liberalism were seen as a potential source of normative change. The paper did not further examine the forces sustaining neoliberalism, but one of these, the dominance of economics in contemporary Western political culture, formed the subject matter of "Economics: Hegemonic Discourse" (1997b), a sketch foreshadowing the discussion in Chapter 6. The authority accorded to a transnational network of like-minded professionals was seen as providing the intellectual and cultural underpinning for a neoliberal order. THEORETICAL PREMISES The conception of liberal international relations theory that underlies the foregoing papers as well as this study was not present ab initio but came to the fore in the course of working on problems of the post-Cold War order. Two broad theoretical propositions are implicit in the preceding outline. 1. The concept of order in international relations is normative as well as descriptive; it signifies something more than just "system" or "pattern." It has positive connotations, in contrast to "disorder," which suggests violence and suffering. The present discussion follows Cox in identifying the question of the legitimacy of any order as a key issue. Legitimacy is taken in the first instance to refer to broad-based support, but it also has further connotations: endorsement by the analyst and the reasoning behind the endorsement. The first premise of the study is that the normative assumptions implicit in the concept of order should not be passed over in silence but should be made explicit and the normative reasoning made clear. This would be a first step toward overcoming the one-sided emphasis on empirical theory that has reinforced the uncritical attitudes noted above. 2. Rather surprisingly, liberal international relations theory was seen to have much to offer with regard to the security dimension of the post-Cold War order but to be problematic in the political-economic dimension. The argument was not that liberalism was superior to real-

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ism as a general theory in the security domain, but rather that in the particular historical conjuncture that followed the Cold War, major longterm developments highlighted by liberal theory appeared sufficient to bring about a systemic change in world politics. The logic of the system no longer necessitated power balancing and hegemonic war as the primary means of maintaining or changing any given order. Political-economic norms and structures now appeared to have the primary role. Or at least, the onus of proof was on those who would maintain the contrary. Yet in its moment of triumph, liberal theory—rather like Marxism after the Russian Revolution of 1917—had little to say on the fundamentals of the prospective political-economic order. The kind of order being promoted by governments and international financial institutions along the lines prescribed by neoliberal economic doctrine confronted a serious problem of legitimacy, but this was not addressed by liberal international relations theory. Additional theoretical premises are developed in the present study. 3. As shown in Chapter 4, contemporary liberal international relations theory is fragmented. There are separate strands of theory relating, for example, to the democratic peace, institutions, and interdependence. There is a pervasive endorsement of liberal norms and institutions as benign, an assumption that they promote the general good: peace, prosperity, development, and human rights. However, there is little theorizing about these values. This is undertaken separately by a handful of normative theorists, whose work has little perceptible influence on the main schools of empirical theory. The interest of the empirical theorists is to establish regularities of behavior; the normative character of these observed patterns is either taken for granted or seen as irrelevant. The theories relate to aspects of international order, but there is no overarching liberal theory of international order itself or its construction, still less its normative character. 4. A premise of this study is that normative theory could and should provide the missing focus for liberal international relations theory. This would be in line with Hoffmann's call to restore the discipline by renewing its link to political theory and also with more recent claims for the centrality of normative theory in international relations (Brown 1992a; Smith 1992). Typically, political theory comes to the fore in times of turbulence and far-reaching change, when questions concerning a community's basic values and institutions become immediately pressing. Recent changes in Western societies have stimulated a revival

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of normative social and political theory. It is remarkable that the vast changes occurring globally between and within highly diverse communities have not prompted a similar revival of normative theory in international relations, especially in view of the new vistas opened up by the ending of the Cold War. Instead, liberal theory proceeds on the basis of a program formulated two centuries ago. The task of undertaking such a refocusing represents an immense theoretical challenge. This study can do no more than reaffirm the need for it and offer some concrete suggestions relating to the topic at hand. 5. Liberal theory should not only be critical, in the sense of engaging with the issues that arise within the considerable normative space afforded by the liberal tradition; it should also be responsive to insights from other traditions. The more persuasive critiques are those that acknowledge strengths in other theories, as well as identifying weaknesses, and incorporate insights from rival theories into their own. Liberal and realist theory have, at least in some respects, been mutually responsive in this way. With respect to the contemporary political-economic order, the most illuminating structural analysis comes from the neo-Gramscian school. Liberal theory should be equally responsive to its insights. 6. The study does not offer a new formulation of normative liberal theory. Its normative premises include core values shared by all liberals and also certain values of one of the contending schools: the radical, also termed, according to the context, egalitarian, socially oriented, or inclusive. I offer arguments for the superiority of certain normative positions within liberalism—in particular, for those that take seriously the claims of equity as well as liberty and accept a broad conception of human rights. The next two chapters set out this approach to liberal theory and practice, first examining the central tradition of liberal political thought, then its extension into international relations.

NOTES 1. The term paradigm is frequently used in international relations discussions to refer to an overarching theory, e.g., the realist paradigm. 2. For an extensive discussion of this issue, see Crawford and Jarvis (2001). 3. American critiques tend to come from a neorealist standpoint and to focus on technical issues such as the statistical significance of the relevant data.

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Elsewhere one finds "constructivist" reinterpretations or wide-ranging critiques such as that of Cohen (1994). 4. Murphy (1994, 23-26), however, refers to a "critical tradition" in liberalism—thinkers who take seriously "the conflicts that the larger liberal internationalist vision can obscure." He includes Americans as well as Europeans. 5. Theorists of international order define this issue in varying ways. Bull, for example, sees order as something more than a mere pattern of social activity or organization; it is one that preserves the most basic human values and thus has a certain minimal claim to legitimacy. For Cox, an order is legitimate ("hegemonic" in his terminology) only if it rests on something more than sheer power but wins broad acceptance through norms that permit a reasonable diffusion of benefits (Bull 1977, 3-8; Cox 1987, 7). 6. A subsequent paper (Richardson 1997a) took up this issue in the context of the Asia-Pacific region. It argued that the onus of proof was on the realists; in the regional context it found the arguments for systemic change based on globalization and the changing cost-benefit calculus of major war more convincing than the hypothesis of the democratic peace. The future of regional security, however, was not predetermined but would depend on "statecraft," and in particular on culturally sophisticated diplomacy.

3 CONTENDING LIBERALISMS

This chapter offers an interpretation of the normative tensions within liberalism, which informs the analysis in the remainder of the book. First, drawing attention to issues raised by the definition of liberalism, it supports the view that it involves a commitment to a plurality of political values, not the pursuit of one supreme value such as freedom. It sees the history of contending elitist and radical liberalisms as falling into three partially overlapping phases: the first over equal political rights (elitism versus democracy); the second over the economic and social implications of liberal values ("classical" versus "social" liberalism); and most recently, over the extension of liberal principles to those who are especially disadvantaged for a variety of reasons ("inclusive" liberalism).

THE CONCEPT OF LIBERALISM Liberalism resists sharp definition: "it is hardly less a habit of mind than a body of doctrine," or "often a matter of broad cultural allegiance and not of politics at all" (Laski 1936, 15; Dunn 1993, 30). Yet most historians are in broad agreement in identifying a cluster of values that have characterized liberalism since its inception. John Dunn sums them up as "political rationalism, hostility to autocracy, cultural distaste for conservatism and for tradition in general, tolerance, and . . . individualism" (Dunn 1993, 33). For John Gray the distinctive liberal values are individualism, egalitarianism, universalism, and meliorism (Gray 1986, x). 1 And Anthony Arblaster lists them as freedom; tolerance; privacy;

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constitutionalism and the rule of law; reason, science, and progress; and—implicitly—property. But he also maintains that individualism is the "metaphysical and ontological core" (Arblaster 1984, 15, 5 5 - 9 1 ) . 2 The characteristic liberal values can be contrasted with those of other traditions. Conservatism, for example, places high value on order, authority, community, and established institutions and tends to favor stability over change; it is comfortable with hierarchy and inequality, hostile or sceptical toward radical reform, and quick to condemn the perceived excesses of individualism or egalitarianism. Socialism, and especially social democratic thought as it developed in Western Europe, shares many liberal values but gives greater weight to equality alongside freedom and to community as against individualism.3 Historically, the differences between liberals and socialists were less over values than over the means for realizing them. To borrow from John Dunn (1993, 2 9 - 3 0 ) , socialists did not regard liberals as "morally vicious" but as "sociologically naive," due to their neglect of the central place of class in modern society as a barrier to the realization of liberal/socialist values. Viewed historically, liberalism is first and foremost normative: a body of ideas about social and political values, the principles that should govern political life, the grounds for political legitimacy. The cluster of values now identified with liberalism came into being over a long period; particular values were articulated in specific historical contexts. Spinoza, for example, gave eloquent expression to certain liberal values—toleration, reason, freedom of speech—but he was not writing in a context where radical political ideas could be expressed and debated openly, and his ideas were subject to widely varying interpretations. He is best regarded as a precursor of liberalism, rather than the first great liberal theorist (Gray 1986, 9 - 1 1 ; but cf. Feuer 1958; McShea 1968). Not all commentators are satisfied with the concept of liberalism as a cluster of values; it lacks sharpness and does not indicate which value has priority. For many there is a clear answer: "liberty . . . is the highest political end" (Acton, quoted in Arblaster 1984, 56). For Alan Ryan the most plausible brief definition is "the belief that the freedom of the individual is the highest political value, and that institutions and practices are to be judged by their success in promoting it" (Ryan 1993, 2 9 2 - 2 9 3 ) . He acknowledges that this presents difficulties: there are serious disagreements over the meaning of freedom, and indeed it is an "essentially contested concept."

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This definition presents a number of other difficulties. For the utilitarians, for example, the supreme value is not freedom but the greatest happiness of the greatest number. And there are other candidates for the defining concept. For Kenneth Minogue, "its key idea has been that of improvement. . . the search for a manner of social life which would dispense with inefficiency, waste and misery . . . The search for harmony, the pursuit of happiness and the doctrine of progress" (Minogue 1963, 62, 65). Annabel Patterson emphasizes equal rights but also the breadth and heterogeneity of the tradition (1997, 1,4). Arguably, the typical liberal refuses to give unconditional priority to any one value but seeks harmony, balance, or trade-offs. The classic liberal manifestos were multivalued: liberty, equality, and fraternity; life, liberty, and the pursuit of happiness. The rigorous prioritizing of freedom in contemporary libertarian doctrine is atypical of liberal thought in general, but rather exemplifies what Minogue terms the "Salvationist heresy" (1963, 6667)4 A second kind of objection to the cluster-of-values definition is Arblaster's argument that a definition should do something more. It should "uncover and describe the theory of man and society which supports the political values of liberalism, and elucidate those values" (1984, 13). For Arblaster this underlying theory that gives cohesion to liberalism is individualism, and he offers a wide-ranging account of its philosophical foundations. It is preferable, however, not to equate definition with interpretation, and this particular interpretation is problematic. It is essentially an ideal type that cannot do justice to the philosophical differences among liberals. Over the centuries they have drawn on diverse philosophical traditions, and partly for this reason individualism is no less complex than the other liberal concepts. Colin Bird, drawing attention to radically different individualist theories, argues persuasively that "the idea of individualism imputes to the liberal tradition a false sense of unity" (1999, 3). It is true that the normative principles of the classical liberals were anchored in assumptions about human nature and society, but they did not share the same assumptions. Like other modern political traditions, liberalism consists in a sequence of debates, literal or figurative—the spelling out of contending positions with some reference to what went before. Liberals differ over the meaning of some of their core values, their relative importance, and their foundations. Commentators have noted many distinctions among liberals: between classical and modern liberalism (e.g., Ryan 1993); between reformism and salvationism (Minogue 1963); or

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between different national traditions (Bramsted and Melhuish 1978). The present interpretation—accentuating one of the subthemes in Arblaster (1984) and in Hartz (1955)—is that the central tension is between two liberalisms, elitist and radical. The former may also be termed, in differing contexts, the liberalism of privilege or liberalism from above; the latter egalitarian, social, or inclusive liberalism or liberalism from below. It would be misleading to depict the two strands as conservative and radical: as the present neoliberal ascendancy sufficiently demonstrates, liberalism from above may have nothing in common with conservatism, and indeed in some circumstances conservatives and radicals may combine against it. For long periods one of these tendencies may predominate, smothering its potential rival but never wholly extinguishing it. The Whiggery of the privileged order in eighteenth-century England appeared beyond challenge, but it provoked the radicalism of universal rights and claims. Radicalism in its pure form has never achieved this kind of hegemony, but a moderated, socially oriented radical strand—derided by critics at the time of its ascendancy but lauded in retrospect—has done so for substantial periods such as the decades after 1945. At times, most notably in the case of the English utilitarians, the contest between elitism and universal claims has been fought within a single school of thought and even in the minds of individual thinkers—a Jeremy Bentham or a John Stuart Mill. For some historians, liberalism does not emerge until the eighteenth century; more precisely, their narratives begin with the "Glorious Revolution" of 1688 and the publication in 1690 of John Locke's Two Treatises on Civil Government (see, for example, de Ruggiero 1927/1959; Bramsted and Melhuish 1978). In Locke, as Gray expresses it, "the central elements of the liberal outlook crystallized for the first time into a coherent intellectual tradition expressed in a powerful, if often divided and conflictual, political movement" (1986, 11). It has been argued convincingly, however, that political movements propounding liberal values first appeared in the mid-seventeenth century, when characteristic liberal themes and debates were articulated in the English Revolution (Laski 1936, 104-118; Arblaster 1984, 146-161; Patterson 1997). This narrative therefore begins with these debates. It is necessarily selective, highlighting certain developments and debates in order to bring out what is familiar and what is distinctive in contemporary liberal doctrine.

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FIRST PHASE: ELITISM VS. DEMOCRACY Seventeenth-Century England

The English Civil War and the Commonwealth during the two decades 1640-1660 provided the setting for the first open political debate in modern Europe. Fifteen thousand pamphlets appeared during these decades (Arblaster 1984, 153), as did the main political works of Hobbes, Harrington, and Filmer. 5 Historians dispute whether there was a genuine revolution, but irrespective of that issue, it was not a revolution (or movement) in the name of a new political philosophy. Rather, the ferment of ideas, the debate over political fundamentals, was occasioned by the breakdown of political order, and the Commonwealth was an improvisation. Following Cromwell's death, no ideological rallying point stood in the way of the Restoration. While there was no fully developed liberal position in these debates, there was an eloquent assertion of certain liberal values and, more important, the clearest possible expression of the tension between the two poles of liberalism. Milton's argument for free speech foreshadowed that of John Stuart Mill: "Consider this, that if it came to prohibiting, there is not ought more likely to be prohibited than truth itself; whose first appearance to our eyes blear'd and dimm'd with prejudice and custom, is more unsightly and implausible than many errors" (Arblaster 1984, 155). Milton came to favor the right of the people to remove rulers who fail to govern "as seems to them best." But who counted as "the people"? At the heart of the seventeenthcentury arguments, writes Arblaster, lies a hard issue which is central to liberalism: the question of the relations between freedom and property. It was increasingly asserted and accepted that a man may do what he will with his own . . . "every free subject of this realm hath a fundamental property in his goods and a fundamental liberty of his person." But who counted as a free subject? This was the subject of much dispute, yet in the end it was the property-owners who triumphed. It was accepted that they had the right, not only to do as they pleased with "their own," but also to control the state itself. (1984, 150)

These issues were argued out in the debates between the Levelers and the army leaders (the "Grandees") at Putney in 1647. Contemporary scholarship for the most part rejects C. B. MacPherson's thesis that the

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Levellers were possessive individualists, much closer to the property owners than had previously been assumed (MacPherson 1962, 107— 159). They are seen as genuine radicals, seeking to uphold the rights of all—that is to say, all English men (Ashcraft 1986, 149-165; Hampsher-Monk 1976, 397-422). Rainborough, their spokesman, argued for the principle that, since "the poorest he that is in England hath a life to live, as the greatest he, [he] is not at all bound . . . to that government that he hath not had a voice to put himself under" (Arblaster 1984, 158). For "every man born in England cannot, ought not, neither by the Law of God nor the Law of Nature, to be exempted from the choice of those who are to make laws for him to live under, and for aught I know, to lose his life under" (Hampsher-Monk 1976, 400). Against this, the army leaders defended the traditional principle that the vote was for those with a stake in the country, in other words, for owners of property. "No person hath a right to an interest in the disposing of the affairs of the Kingdom . . . that hath not a fixed interest in the Kingdom . . . that is, the persons in whom all land lies, and those in corporations in whom all trading lies" (Ireton, quoted in Arblaster 1984, 158). The Levelers' proposals were a threat to property. "You may have such men chosen, or at least the major part of them [as have no local and permanent interest]. Why may not those men vote against all property?" (Hampsher-Monk 1976, 400). For Cromwell it was inconceivable "that men that have no interest but the interest in breathing" should have a voice in government (1976, 399). The army leaders prevailed, but the debate served to highlight the gulf between the claims of equal rights and the actual principles of English parliamentary representation, which were to survive for two centuries.6 Locke

If the Levelers were the first to expose fundamental issues that would divide liberals, John Locke wrote what came to be regarded as the first great liberal texts: The Second Treatise of Government and A Letter Concerning Toleration. Initially, his work was seen as too radical to be welcome to England's new rulers after 1688—too forthright a defense of the right of revolution against an oppressive monarchy. It was only later that it came to be regarded as the justification for the Glorious Revolution (Ashcraft 1986; Ashcraft and Goldsmith 1991). In the eighteenth century, although Locke's influence has been exaggerated, his

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colorful prose was invoked by Whigs, radicals, and Americans in support of their various viewpoints (Dunn 1969a, 45-80). Locke has been open to many readings, and recent scholarship has emphasized the historical context of his writings (Dunn 1969b; Ashcraft 1986; Tully 1993). Much of what became characteristic of liberal thought is not yet present in Locke's work or no more than hinted at—for example, constitutionalism and the separation of powers—and the idea of limited government is discussed only by way of example, admittedly a crucial one: property. What he does offer is the classic formulation of the liberal view of the conditions of political legitimacy. We may note some of his central themes. First, individualism: Locke begins with individuals in the state of nature, enjoying freedom and equality. Although he does not develop a systematic account of natural rights, they provide the foundation, and the individual remains his point of reference, not the community or its institutions, for example. Second, consent: the idea of the social contract is a metaphor, not a historical account of when or how people give their consent to live under a particular government. The idea that the right to rule depends on consent—that authority derives from below, not from above—has been one of the most powerful political ideas since that time, with revolutionary implications for traditional hierarchical societies. Locke did not go so far as Milton in justifying the removal of a government whenever it failed to satisfy the people, but he did justify resistance and, in the last resort, revolution if a government remained persistently oppressive. Third, and closely related, are the ideas of the rule of law and of government as trustee. The latter was to influence liberal theory on colonial administration, but for Locke it served to underline governments' obligation to act in the interests of the people, not the rulers. Governments are dissolved when they act contrary to their trust—when they "invade the Property of the Subject" or make themselves "arbitrary Disposers of the Lives, Liberties or Fortunes of the People" (Locke 1690/1965, 460). Arbitrary power is illegitimate; rulers are obliged to respect the laws enacted by the legislature. A fourth theme was the significance of property: "The great and chief end, therefore, of Mens uniting into Commonwealths, and putting themselves under Government, is the Preservation of their Property" (1690/1965, 395). It was this ringing affirmation and his defense of unequal property holdings, not the ambiguities of his definition of prop-

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erty nor the ingenuity of his theory, that explain Locke's appeal to the propertied classes. It offered reassurance, balancing his political radicalism—"a charter for political revolution which would be in no way socially subversive" (Dunn 1969a, 50). Finally, on toleration, Locke offered a variety of arguments for the individual's right and duty to seek salvation in accordance with his own religious beliefs, and the inadmissibility as well as ineffectiveness of the state's seeking to impose a religion against the convictions of those who dissented. Today his exceptions arouse adverse comment; he denied toleration to atheists for their amorality and to Catholics, since their allegiance to the Pope took precedence over their loyalty to the government. But his central argument remains a powerful statement of one of the core liberal values (Dunn 1984, 22-27, 57-59; excerpts in Bramsted and Melhuish 1978, 182-184). Eighteenth-Century England Eighteenth-century England presented itself, and was admired by some of the philosophes, as a model of constitutionalism, liberty, and toleration—quintessential liberal values. The picture was overdrawn but not entirely fanciful. Although only certain strands of liberalism were present, and some historians remain sceptical over claims that the dominant Whig Party was guided by anything resembling an ideology, there was undoubtedly a prevailing "discourse," and it is plausibly argued that there was "a fairly coherent body of attitudes, prejudices and principles" and that "Whiggism did give philosophic purpose to the state and provided a set of normative values by which to judge the political and social order" (Dickinson 1981, 29). The Whigs echoed certain Lockean themes but did not endorse his theories of natural rights and the social contract. As the heirs of 1688, the Whigs necessarily rejected absolutism and defended constitutional monarchy and, in the last analysis, the right of resistance. Rather than appealing to a social contract, they extolled the merits of England's traditional mixed constitution (Crown, Lords, and Commons) (Dickinson 1981, 38-39). They supported government by the people but rejected any thought of democracy, rather endorsing the view that had survived the challenge of the Levelers: that the franchise should be limited to property holders. "No eighteenth-century Whig challenged the comforting conclusion that a property based hierarchy was the natural order of society" (Dickinson 1981, 33). For the Whigs

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this was not a fixed hierarchy but one open to new forms of property— commerce—and late in the century they were willing to consider electoral reform in relation to new centers of economic activity and thus new propertied interests not represented in Parliament. Support for toleration, initially of Protestant Dissenters but extending to Catholics as their loyalty to the state came to be accepted, and support for freedom of the press rounded out the Whigs' liberal credentials. The obverse of this picture, which places Whig England among the most extreme examples of the liberalism of privilege, was the extent to which the rights of the less well-to-do were restricted, even compared with the seventeenth century. Parliamentary representation was actually reduced in some constituencies, and Parliament approved measures that widened the gulf between the propertied classes and the mass of the people. There were further enclosures of land and new capital crimes involving offenses against property, as well as a mass of lesser ones that could be tried by summary conviction—invariably by property holders.7 Despite his generally positive analysis of Whig ideology, Dickinson concedes that "it can therefore be fairly concluded that the Whigs were concerned to preserve the liberties of the subject in general but that they were chiefly preoccupied with the defence of private property" (1981,34). A challenge to Whiggism emerged in the later decades of the century from the "bourgeois radicalism" associated with Dissenters and manufacturers, whose leading figures included parliamentary reformer John Wilkes, Dissenter minister Richard Price, and scientist Joseph Priestley. The parliamentary reformers, whose aim was by no means universal suffrage but a broadening of representation to include new manufacturing and commercial constituencies, nonetheless invoked Locke's authority in demanding "fair and equal" representation. Indeed, Wilkes went so far as to quote Locke in Parliament, and in general it was the radical reading of Locke that entered into the ensuing debates and polemics (Kramnick 1990, 173-176, 185-190). Priestley was a leading figure in the establishment of Dissenter academies that taught science and practical subjects relevant to the advancement of manufacturing, and provided focal points for the spread of radical ideas. Along with Enlightenment themes of science and social progress, the radicals favored liberal economic principles, supported the claims of the American colonists, and sought relief from continuing forms of religious discrimination. Extolling the virtues of industriousness, they condemned the idleness they associated with both the aristoc-

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racy and the poor. Their dissatisfaction with the existing system of poor relief and proposals to require the poor to work harked back to Locke and foreshadowed the thinking of the early-nineteenth-century economists on poor-law reform. If the Whig ideology served the interests of the established landed and commercial elites, radicalism expressed the outlook and interests of an emerging sector of the middle class in what came to be known as the Industrial Revolution (Kramnick 1990, 1-98). Thomas Paine constitutes an exception. A Quaker of modest background and no settled career, largely self-educated, he came to share most of the radical-liberal ideas of the age: an interest in science, progress, and education; hostility to hereditary privilege; a belief in the benefit of unrestricted commerce; and support for American independence. The American Revolution brought out his skills as a political publicist. Subsequently, he responded to Burke's critique of the French Revolution with his (implicitly) revolutionary Rights of Man, implying a need for the radical reconstitution of British government on the principle of the equality of political rights. Beyond this, he was unique among early liberal thinkers in proposing, on the basis of a doctrine of individual rights, a number of unheard-of social measures: the payment of pensions to the aged poor; payments for the education of children in poor families; and payments to relieve particular hardships in relation to childbirth, marriage, funeral expenses, and unemployment in large cities—an approach that contrasted sharply with the censorious attitude toward the poor more typical of the middle-class radicals (Paine 1791/1969, 262-270; Arblaster 1984, 228-230). The United States: The Formative Period

Contemporary scholarship has shown that Anglo-American political thought in the eighteenth century was not, as it has often been depicted, entirely dominated by Locke. Following the seminal work of J. G. A. Pocock (1975), historians of ideas have shown that much of the political writing of this period falls outside the framework of "Lockean liberalism" and can be better interpreted in terms of a different tradition of thought—the "republican." This republican discourse drew on classical and Renaissance thinkers, above all Machiavelli. The frame of reference was the polity and the citizen, rather than the individual. Republicans proclaimed the merits of a mixed form of government—a separation of powers and above all the need for a citizenry entirely independent of the central government and participating actively in

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public affairs, committed to the pursuit of the public good. The civic virtues of such a system were in constant danger of corruption through the propensity of the executive to amass power and wealth, a danger heightened by the expansion of commerce and standing armies (Pocock 1975; for a summary see Pocock 1972, 120-121). While the idea of the separation of powers became part of liberal thought and there was a shared apprehension of too-powerful government, the frame of reference of the two traditions was quite different. There is nothing surprising in this general thesis; indeed it would be surprising if eighteenth-century political thought amounted to nothing more than a Lockean monologue. If there was an initial tendency to replace it with a republican monologue—and there has been no lack of polemical debate between republican and neo-Lockean interpreters of the later eighteenth century—there is agreement that both strands of thought were present in the later decades, and above all in the debates on the American constitution (Pocock 1987, 341-345; Kramnick 1990, 260-288). The participants showed little or no awareness of tension between the two frameworks; it is more plausible to suggest there was a fusion between them (as implied by Patterson 1997, 3, 279-305 and passim; Haakonssen 1993). It follows that it is necessary to qualify the influential thesis of Louis Hartz (1955), according to which American political thought was dominated by Locke from the outset; however, it does not follow, as the republican school appears to maintain, that Hartz's reading of the subsequent character of American political thought is fatally flawed. Hartz does not, for example, refer to a "Lockean liberal consensus" (Pocock 1972, 127, 132), with respect to the 1780s or later. His interpretation is not about consensus but about the limited parameters of American thought in comparison to that of other Western societies, and the republican tradition did little to expand those parameters. Hartz is well aware that basic presuppositions often remain unspoken. "There has never been a 'liberal movement' or a real 'liberal party' in America: we have only had the American Way of Life, a nationalist articulation of Locke which usually does not know that Locke himself is involved" (1955, 11). After his historical overstatement has been corrected, Hartz's basic insight remains persuasive: a society which begins with Locke, and thus transforms him, stays by Locke . . . and becomes as indifferent to the challenge of socialism in the later era as it was unfamiliar with the heritage of feudalism in the earlier

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one. It has within it, as it were, a kind of self-completing modernism, which insures the universality of the liberal idea. (Hartz 1955, 6)

Hartz, in effect, offers an explanation of U.S. political culture— "American exceptionalism"—in terms of the fit between individualist liberalism and America's unique historical experience and social structure. In Europe liberalism emerged in the context of a highly stratified, hierarchical society. The early liberal elites sought to overcome political absolutism and the closed aristocratic elites that supported it, but without risk to property or opening the way to rule by the "mob." In the United States, however, landed property was widely diffused, and opportunities for individual advancement were sufficient to remove the sense of threat from below that was so strong in Europe. In the American setting an individualist philosophy (Locke) could win acceptance at all levels of society. As Hartz expresses it, with reference to de Tocqueville: In a society evolving along the American pattern of the Jeffersonian and Jacksonian eras, where the aristocracies, peasantries, and proletariats of Europe are missing, where virtually everyone, including the nascent industrial worker, has the mentality of an independent entrepreneur, two national impulses are bound to make themselves felt: the impulse toward democracy and the impulse toward capitalism. The mass of the people, in other words, are bound to be capitalistic, and capitalism, with its spirit disseminated widely, is bound to be democratic. (1955, 89)

Even so, the tension between an articulate elitist version of liberalism and the initially hesitant radical version colored U.S. politics in the early years after federation. "The Federalists and the Whigs, in their love of capitalism and their fear of democracy, duplicate at virtually every point the European pattern of bourgeois thought" (Hartz 1955, 90). Blinded to the differences between American and European society, they sought ufisuccessfully to resist the onset of democracy, unable to find a firm basis for support. Insofar as the Federalists were also influenced by the civic republican tradition, with its image of the educated property holder engaging in public life as a service to the community, this would have reinforced their elitism and further separated them from the egalitarianism that already characterized American society. In practice, the individual American states moved at different times

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from a franchise based on landed property, along English lines, through a broadening of the property qualifications and their replacement by a taxpayer qualification, to eventual manhood suffrage, such that by the time of the very limited British electoral r e f o r m of 1832, most American states had white male suffrage or at least a taxpayer franchise. 8 This democratizing process went along with the opening up of the country to the west, offering opportunities to those willing to pursue them. Jacksonian democracy in the 1830s gave strong expression to the individualist ethos and supported a pragmatic laissez-faire approach to the economy, its particular targets being corporations and financial institutions granted monopolistic privileges by the state. In the absence of the kind of social tensions that were so acute in Europe, there was no ideological conflict and no impetus to political theorizing (Hartz 1955, 141). It was perhaps the easy triumph of American democracy in these circumstances that consolidated the individualist political culture. France: Enlightenment, Revolution, and Restoration The liberal values expressed complacently and unreflectively in eighteenth-century England found fuller and sharper expression in the French Enlightenment, where the defense of toleration and freedom of speech incurred the deep hostility of the Church and risked imprisonment or exile by the state, as Voltaire's experience made clear. In this setting the enthusiasm for science and education, the early expression of the basic ideas of utilitarianism, and above all, the subjection of all beliefs to the test of reason had the effect of gradually undermining the legitimacy of the absolutist monarchy. The Enlightenment thinkers did not put forward a program of political reform, but their praise for the English system meant that it was the example of constitutional monarchy that came to hand when absolutist rule collapsed in 1789. The Enlightenment thinkers by and large shared the social conservatism of the English rulers; the existing deep social divisions were taken as given. There were the same expressions of concern about the mob, and Diderot was representative in assuming that citizenship rights should be tied to property (Arblaster 1984, 189-191). The constitutional monarchy, needless to say, could not survive the turmoil of the French Revolution. As the moderate Girondins gave way to the radical Jacobins, followed by the Terror and the Dictatorship, the initial liberal enthusiasm for the revolution gave way to dismay, both in

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France and elsewhere. The Declaration of the Rights of Man (August 1789) had invoked both the classical liberal freedoms and equal rights: "Men are born and remain free and equal in rights. Social distinctions can only be based on common utility." But if this was open to a democratic interpretation, the course of the revolution confirmed all the liberals' worst fears of democracy—rule by the mob. For several generations most European liberals would reject democracy, and the egalitarian values that had surfaced briefly in 1789 were firmly subordinated to the values of freedom and constitutionalism. This elitism was most striking in France, where liberals enjoyed some influence under the Restoration (1815-1830) and, in effect, achieved the constitutional monarchy of their choice under LouisPhilippe (1830-1848). By and large, liberals supported the stringent property qualifications that restricted the electorate to about one hundred thousand initially, and about two hundred and fifty thousand under Louis-Philippe, denying the franchise to the many millions of small property holders as well as the propertyless (de Ruggiero 1927/1959, 159, 177). Benjamin Constant, the most prominent liberal theorist of the time, distinguished between ancient and modern liberty: the former consisted in active participation in political life while "subjecting the individual to the power of the community," while the latter meant, first and foremost, freedom from arbitrary acts of government, a private sphere, and freedom of self-expression—"negative freedom," as later defined by Isaiah Berlin (1958)—and only in second place, the right "to influence the administration of the state" (de Ruggiero 1927/1959, 167-168). Constant's main concerns were to secure individual rights: freedom of thought and religion, trial by jury, freedom of occupation, and the inviolability of property. These were the values he sought to protect by balancing the different organs of government (Bramsted and Melhuish 1978, 54-58). There were no prominent liberal advocates of democracy until much later, but Alexis de Tocqueville challenged his fellow liberals with his thesis that Western societies were experiencing an inexorable movement in favor of social and political equality, the nature and consequences of which could be observed most clearly in the United States (1835-1840/1946). De Tocqueville canvassed all the dangers to liberal values that could be discerned in the American democracy. His classic work is usually read for its profound analysis of American society, but it also offers an illuminating perspective on the prevailing liberal apprehensions of democracy.

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Utilitarianism

It is occasionally questioned whether utilitarianism should be included within liberalism. As Arblaster notes, there is potential conflict between the liberal principle of freedom and the utilitarian principle of happiness or pleasure (1984, 350). This may be regarded, however, as one of those tensions within liberalism normally left unexamined—not surprisingly, since utilitarianism is usually seen as the dominant ethical theory in twentieth-century liberal societies (Rawls 1972, vii-viii), providing the normative rationale for public policies and, in particular, for welfare economics. The utilitarian foundation for justifying policies broke completely with natural rights, which the first of the English utilitarians, Jeremy Bentham, roundly condemned as a metaphysical doctrine, "nonsense on stilts." But Bentham and his followers affirmed most of the Enlightenment themes—reason, science, education, the rejection of arbitrary government—and offered the principle of utility in place of the appeal to tradition or authority. Above all, the utilitarians shared the liberals' individualism—in their image of society as consisting of selfinterested individuals and in making the individual the point of reference for their normative thinking. The fear of democracy was widely shared in early-nineteenth-century England, but even so, the early utilitarian thinkers drew the logical—radical—conclusion from their principle of the greatest happiness of the greatest number. Bentham went so far as to endorse universal suffrage, and James Mill a franchise sufficiently wide to ensure all interests were represented (Plamenatz 1949, 82-84, 105-109). Only then could there be any assurance that governments would take the interests—the "happiness"—of the greatest number into account. Mill responded to conservative objections by arguing for broad-based education; an educated populace would respond to reasoned argument and would respect property. Such arguments wholly failed to persuade the political elite. Electoral reform proceeded very slowly through extensions of the property qualification for the vote, and universal suffrage came only in 1918.9 Rather surprisingly, it was a utilitarian of the next generation, John Stuart Mill writing in the 1860s, who expressed greater concerns over democracy. By then the elemental fear of the threat to property had given way to the liberal individualist's fear of the tyranny of the majority—the tyranny of conformism, the threat to intellectual and cultural freedom. Mill proposed electoral schemes for weighted voting intended to enhance the position of the educated, not

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the wealthy—a liberal compromise that failed to win support (Arblaster 1984, 277-282). Nineteenth-century liberals, then, remained ambivalent toward democracy, even though the logic of equal rights, no less than utilitarianism, pointed in this direction. Radical liberals had given the initial impetus, but the liberal elite, primarily concerned with individual freedom and constitutionalism, remained a brake on its development.

SECOND PHASE: LAISSEZ-FAIRE VS. SOCIAL LIBERALISM The nineteenth century saw the emergence of a second major cleavage within liberalism, this time relating to political economy. Liberals retained a shared commitment to freedom and constitutionalism but divided over the implications of liberal values for organizing society under the conditions of industrialization, which, along with massive problems, created entirely new opportunities for realizing liberal rights and freedoms for the people as a whole. The cleavage was not articulated as one between elitism and egalitarianism but was readily recognized by contemporaries as such. It will be argued that there is normative continuity between the two overlapping phases. The central issue remained essentially the same: were liberal rights and freedoms to be genuinely extended to all? Political Economy Utilitarianism provided the political framework for the thinking of the early political economists, which in turn gave rise to laissez-faire economic policy (Coats 1971, 1-17). This was by no means a necessary consequence of utilitarianism. Initially, Bentham's thought prompted wide-ranging legislative and administrative reforms, and by midcentury John Stuart Mill foreshadowed the later development of utilitarian thought in favor of the welfare state. But for more than a generation, starting in the 1830s, utilitarianism was enlisted in support of laissezfaire, to the point of legitimizing the excesses and urban misery of the early Industrial Revolution. 10 Adam Smith's sanguine expectation of the general benefits of the "hidden hand" was now overshadowed by Thomas Malthus's doctrine of population expanding to the limits of subsistence and David Ricardo's assumption of conflicting class inter-

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ests. Nonetheless, faith in laissez-faire remained unshaken. Whatever ills might be apparent, government intervention could not ameliorate them. "There is no one to blame for this; it is the result of Nature's simplest laws!" (Arblaster 1984, 252). Thus The Times reaffirmed the conventional wisdom of the era. Some historians deny that the classical economists were committed to laissez-faire; it is claimed, for example, that their recommendations "were on the whole cautious and reasonable" (Coats 1971, 17). It is true that individual economists were prepared to support state initiatives in a number of areas such as public works and education. Moreover, the classical economists were surprisingly pragmatic on free trade, so much an article of faith for the contemporary economics profession (Coats 1971, 28-29). Ricardo, for example, implied that the abolition of the grain tariff would not have the general benefits proclaimed by Richard Cobden and the Anti-Corn Law League.11 Most of them accepted the need to regulate children's hours of work in factories, and they were not uniformly opposed to factory legislation generally. But a careful study concludes that "all things considered, the Ten Hours camp was not far wrong in regarding 'political economy' with its slogan of 'free agents' as a major obstacle to factory reform" (Blaug 1971, 120). Blaug also notes that their economic analysis of the issue was relatively superficial. Nonetheless, allowing that classical economists were not "dogmatic exponents of laissez-faire," it was the simple, dogmatic version of their views that entered into political discourse and thus served as a major constraint on policy. A. W. Coats (1971, 18) notes the wide readership of popularizers such as Jane Marcet and Harriet Martineau. The authority of science was freely invoked in support of these simplifications. Thus Chadwick claimed that the Poor Law of 1834 was "the first great piece of legislation based upon scientific or economic principles." According to Brougham, defending it in Parliament, the Elizabethan authors of the old poor law "could not foresee that a Malthus would arise to enlighten mankind upon this important branch of science—they knew not the true principle upon which to frame a preventive check on the unlimited increase of the people" (Arblaster 1984, 255). The most indefatigable defender of laissez-faire was the Economist, founded in 1843 by James Wilson, a man "guided by an evangelical and passionate faith" (Gordon 1955, 463). The Economist was unhappy with the term "political economy,"

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for the distinguishing feature of Smith's science is the proof it continually supplies that all policy—unless laissez faire . . . can be called a policy—is erroneous, injurious to the production of wealth, and repudiated by the science. (Gordon 1955, 476)

It found Ricardo overrated because of his equivocation on free trade. Turning to the question of the condition of the lower classes, it had no doubt that any attempt by the state to provide welfare would make things worse. The lower classes were responsible for their own condition—they wasted time on drink and foolish amusements, they looked to others to promote their welfare, they followed false leaders; the "only possible route of betterment [was] the full acceptance of individual responsibility" (Gordon 1955, 480). The regulation of factory hours would do irreparable harm to the workers, and the journal resolutely opposed state support for education, health, the provision of water, and the granting of patents and copyright (1955, 483-485). If the Economist represented the extreme of the public discourse, the response to the Irish famine of 1846-1849 provides the extreme instance of governmental inflexibility. It is estimated that a million and a half people died, and Clarendon, the Lord Lieutenant of Ireland, was moved to write that "I don't think there is another legislature in Europe that would disregard such suffering as now exists in the west of Ireland, or coldly persist in a policy of extermination," but the government never wavered in its refusal to intervene in the market. "Perfect Free Trade is the right course . . . [it is] far better to leave the supplying of the people to private enterprise and the ordinary trade . . . we must abstain from any attempt to tamper with prices . . . the more I see of government interference, the less I am disposed to trust it." The influence of Malthus, too, was present in references to Ireland's "redundant population" (Arblaster 1984, 258-259). In England itself the effect of the ideology was always tempered by political crosscurrents, even in so extreme a case as the administration of the new poor law. Lacking independent political power, Ireland experienced the effects of the doctrine in its purest form. It may not be correct, however, to attribute the oversimplification of laissez-faire entirely to popularizers and politicians. The economists themselves were not free from simplification. This was facilitated by the style of reasoning introduced by Ricardo, which profoundly influenced the development of the discipline. Arguably, it signified a major advance: Ricardo stripped the world to its essentials, laying bare its underlying structure. "By building a model world, Ricardo gave the

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powerful tool of abstraction to economics—a tool that is essential if the distraction of everyday life is to be pierced and its underlying mechanism understood" (Heilbroner 1972, 99). Yet, as Malthus argued at the time, such a method, with its neglect of specific conditions and changing circumstances, was dangerous when it came to drawing practical inferences (Keynes 1956, 32-33). In a world of complexity and contingency, the Ricardian style of reasoning encouraged policymakers to posit simple, uniform relationships. Joseph Schumpeter addresses the issue at some length: The comprehensive vision of the universal interdependence of all the elements of the economic system . . . probably never cost Ricardo as much as an hour's sleep. His interest was in the clear-cut result of direct practical significance. In order to get this he cut that general system to pieces, bundled up as large parts of it as possible, and put them in cold storage—so that as many things as possible should be frozen and "given." He then piled one simplifying assumption upon another until . . . he was left with only a few aggregative variables between which, given these assumptions, he set up simple one-way relations so that, in the end, the desired results emerged almost as tautologies. (Schumpeter 1954, 4 7 2 ^ 7 3 )

Schumpeter terms this the "Ricardian vice," and John Maynard Keynes comments that "the almost total obliteration of Malthus's line of approach and the complete domination of Ricardo's for a period of a hundred years has been a disaster for the progress of economics" (Keynes 1956, 33).12 Ricardian economics, then, encouraged the oversimplification of policy issues; a later chapter will suggest that Schumpeter and Keynes are correct in seeing this as a recurring problem. Along with this fundamental analytical weakness, laissez-faire economics illustrates a mode of normative one-sidedness that became a recurring feature in liberal thought. Until then, economic freedom had not been the overriding value promoted by liberalism but had been balanced by the idea of moral equality—whether in the form of natural/ universal rights; Kant's imperative that every person be treated as an end, not a means; Adam Smith's assumption that economic development should benefit all levels of society; or the utilitarian norm of the greatest happiness of the greatest number. In laissez-faire economics— as in Whig ideology, although for different reasons—the egalitarian commitment disappears entirely. The principle that the state not intervene in the economy—and indeed refrain from any social initiative—is

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elevated into a categorical imperative. The currently existing distribution of property rights (and the ensuing unequal chances) is treated as sacrosanct; the realization of individual values is entirely subordinated to it. It is not surprising that the extreme conditions of early industrializing England and the extreme doctrine of laissez-faire provoked extreme reactions. For more than a century, though not initially in England itself, the most important of these was socialism. Normatively, it elevated equality alongside or even above freedom; analytically, it replaced individualism with an emphasis on social class. And its approach to policy was the opposite of the liberal's minimal state, although how great a role to accord the state varied. The initial English reaction against laissez-faire, however, was led by conservatives, drawing occasionally on European anti-Enlightenment thought but more on a benign reading of the English conservative tradition as one committed to social balance and the good of the community as a whole (Disraeli voiced the concern that England had been split into "two nations"). It was a Conservative, Shaftesbury, who led the movement for factory legislation against what was depicted as the ruthless class interest of the manufacturers. Such critics had no hesitation in identifying laissez-faire liberalism as elitist. There was also a strong cultural reaction. Dickens did not limit himself to depicting the evils of London's poverty but savagely satirized the rationalizations of political economy. Carlyle denounced the evils of mammonism, and Matthew Arnold lamented liberalism's cultural poverty (de Ruggiero 1927/1969, 138-139; Arblaster 1984, 246-247, 252, 274-275). Social Liberalism The reaction against laissez-faire prompted a new direction in liberal thought in Britain and Germany in the later nineteenth century and, to a much lesser extent, in France and the United States. This amounted to a major rethinking of liberalism in the light of the conservative and socialist critiques of laissez-faire. Accepting part of the critique, the social liberals (the English "new liberals") maintained that this did not mean an abandonment of liberalism but rather its reformulation. Under the conditions of industrial society the insistence on the minimal state and the view that trade unions obstructed economic progress no longer promoted liberal values but became obstacles to their realization. In Germany, where the economic nationalism of Friedrich List had

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provided a different justification for state initiative in the economy, social liberals had no need to contest the minimal state. They looked mainly to trade unionism, not to the state, however, to moderate the dehumanizing tendencies of unrestrained capitalism. Economists Lujo Brentano and Gerhart von Schulze Gaevernitz developed a liberal alternative to the marxist doctrine of intensifying class conflict: trade unionism would improve the conditions of the workers along with the advance of industry, and social progress, in turn, would promote economic progress (de Ruggiero 1927/1959, 265-270). In Britain, where John Stuart Mill had initiated the debate, T. H. Green in the 1880s and L. T. Hobhouse in the early twentieth century undertook a more thoroughgoing rethinking of liberal philosophy. Green broke not only with utilitarianism but with the whole tradition equating liberalism with "negative freedom"—freedom from control by the state. Instead he drew on the Hegelian idea of "positive freedom"— in Green's words "a positive power or capacity of doing or enjoying, [not] at the cost of a loss of freedom to others [but] something that we do or enjoy in common with others." The ideal of true freedom is "the maximum of power for all members of society to make the best of themselves" (Bramsted and Melhuish 1978, 652-653). Central to Green's thought is not only positive freedom but equality: the equal claims of all members of society to realize their potential. Thus reinterpreted, individual freedom remains a core liberal value. A familiar liberal norm such as freedom of contract is not an end in itself but a means to an end, and the essential criterion for judging social legislation is whether it is needed to provide the preconditions for the realization of positive freedom for the less advantaged members of society (Bramsted and Melhuish 1978, 653-656).' 3 Hobhouse offers the most systematic statement of the "new liberalism." Starting from a somewhat idiosyncratic formulation of traditional liberal values—negative freedoms, broadly construed—he presents the history of liberalism as advancing toward the more comprehensive theory of his time, which looks to the positive realization of individual potential in the context of industrial society (Hobhouse 1911/1994; Meadowcroft 1994). Like Green, he sees this as requiring a far more positive role for the state, as a means to this end, than the classical liberals—preoccupied with the struggle against absolutism, aristocratic privilege and anachronistic economic regulations—had allowed. Also like Green, he emphasizes equality, indeed equality of opportunity (1911/1994, 15) and, whether consciously or not, he echoes a Kantian

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theme in contending that "liberty . . . rests not on the claim of A to be let alone by B, but in the duty of B to treat A as a rational being" (1911/1994, 59). Normatively, Hobhouse espouses liberal individualism but seeks to balance it with a doctrine of what the individual owes to the community. Empirically, he breaks more decisively with an individualist conception of society, replacing it with an organic theory (1911/1994, 59-66; Meadowcroft 1994, xi, xvii-xx). Like others at the time, Hobhouse was well aware there was a problem of distinguishing liberalism, thus redefined, from socialism in its local (Fabian, nonMarxist, eclectic) version—just as, from a more extreme socialist perspective, the Fabians were difficult to distinguish from liberals. The same question arose in France of the Third Republic, where the boundaries between liberalism, radicalism, and socialism were ill defined, especially in parliamentary politics. French social-liberal thought was most fully developed by a leading radical-socialist parliamentarian, Léon Bourgeois. There was no major French social-liberal theorist, however, and liberal thought had a particular preoccupation that was absent elsewhere, namely, concern over the power of the centralized French state. Thus critiques of excessive etatism and reaffirmations of classic individual liberties were more prominent in France at this time than elsewhere, and social issues were less salient for French liberalism than in England or Germany (Kloppenberg 1986, 301-305; de Ruggiero 1927/1959, 205-210; Bramsted and Melhuish 1978, 587-589, 638-652). The American

Exception

American political discourse resisted this social turn in European liberalism, remaining within the Lockean parameters of individualist liberalism—in "the American world of Horatio Alger," as Hartz expresses it, the world of limitless individual opportunity. This did not mean that every individual thinker was restricted within this paradigm but that those who ventured outside it found little resonance, and in practice tended to accommodate it. In the 1870s and 1880s, a number of young economists—Richard Ely, John Bates Clark, and Henry Carter Adams—responded to the conditions created by industrialization rather similarly to the European social liberals. Deeply influenced by evangelical Protestantism, they found merit in the socialist critique, sympathized with the labor movement, and were attracted by some aspects of socialist thought. But none

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of them developed their ideas into a systematic political theory, and in the interest of professional acceptance and indeed of retaining their academic appointments, they soon moderated their critique, dissociated themselves from "socialism," and "gave up the effort to transform the national ideology to include some measure of socialism" (Ross 1991, 117)." The fullest expression of social-liberal theory was that of philosopher and educator John Dewey, writing between the 1890s and 1930s, who acknowledged the influence of Green and an affinity with Hobhouse. Dewey's main political writings, relatively late in his career, were much less influential than his philosophy and educational theory, especially when in the 1930s he came to support the use of socialist means to achieve liberal goals (Hoy 1998, 79-96; Kloppenberg 1986, 350-351,400-401). The marginalizing of social liberalism in late-nineteenth-century America is part of the larger story of the marginalizing of socialism, while radicalism found expression in the Progressive movement, with its program directed against trusts, the power of money, and political corruption.15 The reasons for the success of the U.S. elites in virtually excommunicating socialism at a time when the socialist movement was establishing its political presence in Europe need not be canvassed here, beyond noting that Hartz's comparative perspective brings out the difference between a new ideology's emergence as part of an already diverse ideological spectrum, and its being the sole challenger of a doctrine that, however fuzzily defined, is bound up with the sense of national identity. A further possible reason for the tentativeness of the social-liberal challenge was that laissez-faire economics had not been so sharply formulated in the United States as in England. The early American political economists were divided on the issue of free trade. Then as later, there was a "pragmatic acceptance of much state action" (Hartz 1955, 209); laissez-faire was not the article of faith it constituted for a time for English liberalism. Although individualism was pervasive, there was no well-defined doctrine to stimulate the formulation of an alternative. The Great

Depression

Despite the efforts of policymakers in the 1920s, it proved impossible to restore the liberal international economic order that had been shattered by World War I. By the 1930s liberalism was rejected in central

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and eastern Europe in favor of totalitarian or authoritarian regimes. In Britain and France, as political conflict became polarized in different ways between left and right, liberalism was discredited, even though the political culture remained essentially liberal-democratic. Only in the United States, despite the unprecedented shock of the Depression, was there no ideological conflict and no threat to the liberal order. We may note two significant liberal responses to the Depression: that of John Maynard Keynes in Britain and the New Deal in the United States. Keynes identified with liberalism and the Liberal Party, not as a political theorist but through his personal and political commitments. Hostile to diehard conservatism, he had some sympathy with the Labour Party but not with socialism or class conflict. "He could never take [Marxism] seriously as a science. But he did take it seriously as a sickness of the soul" (Skidelsky 1992, 517). By contrast, he drew much of his inspiration from the classical political economists. He exemplified the core liberal values and cast of mind, placing the highest value on individual cultural pursuits, and shared the liberal confidence in science and, ultimately, progress (Arblaster 1984, 292-295; Skidelsky 1992, 405^430). While he might appear to have a broad affinity with Green, he rather emphasized his differences with the Oxford Hegelians (Skidelsky 1992, 224). Sympathizing with the young generation's rejection of capitalism but scorning their marxist solution, he held that the system could be salvaged, but only through a fundamental rethinking of its operation. His anger and polemics were directed against the crippling economic orthodoxies of the day—their rationalizations, their acquiescence in mass unemployment, their blindness to new issues that challenged their models, their refusal to struggle for new models adequate to new situations. From his struggles emerged his model of the macroeconomy, his proposals for demand management by the state, and later, his ideas for reforming the international financial system. The New Deal was not the product of a single doctrine or theory but consisted rather in a sequence of pragmatic expedients—"bold, persistent experimentation"—that reflected Roosevelt's temperament and found a positive response from the electorate. If the economic policies eventually came to appear Keynesian, this was due mainly to the logic of events but also to openness to new ideas. But there was no revision of liberal theory in favor of greater state initiative. Many of the New Deal's policies were relatively old, in European terms, yet in the absence of an effective socialist movement they appeared radical in American terms and, accordingly, were assailed from the right. Because

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American political culture remained individualist (Lockean), there was good reason to avoid formulating a social-liberal doctrine vulnerable to attack within that culture. But this would leave social-liberal measures highly exposed to subsequent critique. Embedded Liberalism For Western societies the decades after 1945 were a time of unprecedented economic growth, its benefits distributed relatively equitably, and of politically stable democracy, except for a handful of southern European countries. The period is often identified with the welfare state or the Keynesian consensus and has even been called the "golden age" (Hobsbawm 1994)—ironically so, in view of that term's association with the liberal world before 1914. John Ruggie's term, embedded liberalism, is especially apposite, but it also points to a question: is it correct to describe the post-1945 world as liberal? In Europe liberal parties as such were politically marginal, and the postwar consensus accepted a degree of state initiative that was anathema to classical liberals. 16 On the other hand, with the defeat of fascism liberal-democratic institutions were secure and the core liberal values were accepted without question. The traditional liberal agenda had, it appeared, been achieved; political conflict was over incremental welfare issues and managing the mixed economy. Only later in the period, with the feminist movement and sexual activism, did it become clear there was an extensive new radical-liberal agenda: not that all the radicals identified with liberalism, but the rights they sought were quintessentially liberal—and had indeed been endorsed by J. S. Mill and Keynes, respectively. The question is whether, when economies are so much subject to state initiative and regulation and the goals of politics are identified with welfare rather than freedom, the societies in question are rightly termed liberal. Those who followed Green and Hobhouse had no difficulty in answering affirmatively: the expanded economic and social role of the state was a necessary means in modern industrial society to enable individuals to achieve freedom—to realize their potential. Ruggie, following Karl Polanyi, makes a related point: an unregulated market economy would create a degree of deprivation and social disruption that would prove intolerable. Governmental regulation of the market is therefore necessary in the interests of social stability and balance (Ruggie 1982, 393-398). The logic of the market does not completely

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dominate society, but the economy is "embedded" within a social and political order that limits its potential for unraveling social bonds. German thinking on the social-market economy followed similar lines. The differences between classical and social liberalism are partly over values but even more over institutional means: how can liberal values best be realized in contemporary society? Classical liberalism does not constitute the whole of the tradition but refers to a particular historical phase. 17 There is no reason to regard any one conception of political economy as defining liberalism for all time—Adam Smith's conception, for example, any more than those of Alfred Marshall or Keynes. Social liberalism is as much part of the liberal discourse as its rival; the attempt to exclude it is essentially a political act seeking to exploit a traditional association of ideas. It is also an attempt to narrow down liberal values, marginalizing equal rights and claims to freedom, redefining liberalism such that "economic freedom," understood in a particular way, becomes the supreme, defining value. This view could not survive a reading of the classical liberal texts but amounts to a distortion and narrowing of the history of liberal thought. The Neoliberal Ascendancy In the European context the resurgence of classical liberal thinking in the 1970s and its subsequent dominance of public discourse came as an astonishing, barely comprehensible turning back the clock—a return to laissez-faire, as it was often perceived. In the first instance it was a rejection of Keynesian economics, but viewed more broadly, it amounted to a revival of the political-economic thinking that preceded Green and Hobhouse, with its determination to minimize the economic role of the state—the philosophy of "small government." Indeed, contemporary neoliberal ideology, as it shall be termed, seeks to go further: it amounts to an attempt, far more thoroughgoing than that of its nineteenth-century predecessor, to subordinate the state to the market and to transform the political culture to this end. Its effect on political practice has been varied, but even though it has not always been successful in reducing the level of state expenditure, the neoliberal offensive has succeeded in eroding the legitimacy of the welfare state and, more broadly, the public sector and in impoverishing publicly funded institutions, especially those such as universities and libraries for which there is no mass electoral lobby. Deregulation and privatization have been the leitmotifs. In Thatcher's Britain, the extreme case, social provision by the state was

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pared back and the public sector extensively privatized, but equally striking were the new centralization of government, the lack of accountability of services formerly publicly provided, and the elimination of many of the institutions and traditions of English conservatism (Gray 1997, 1-10, 97-155). In the United States, on the other hand, the revival of an earlier liberalism aroused no sense of shock but seemed quite normal. Although many American economists had become Keynesian and certain welfare programs had achieved wide acceptance, public rhetoric had never endorsed social liberalism or the welfare state. Whereas the sudden canonization of Friedrich Hayek in Britain required something like a paradigm shift, Milton Friedman was able to invoke familiar themes in the American public discourse that had, however incongruously, survived in the pragmatic eclecticism of the New Deal and the Great Society. In Britain there was indeed a change in the political and intellectual climate in the 1970s, but it did not amount to a paradigm shift. What Hayek offered was not a new paradigm but essentially the reaffirmation of an old one, albeit in the unfamiliar idiom of the "Austrian school." He offered an appealing image of the spontaneous order created by the market, coordinating the myriad individual decisions in the economy in a way that was beyond the knowledge or capacity of governments; not only central planning but any effective regulation of the economy was impossible. He was at pains to demolish as meaningless the concept of social or distributive justice, in the name of which governments restricted individual freedom (Hayek 1960, 1976; de Crespigny 1976). Hayek's ideas caught on in Britain, which was experiencing serious economic problems in the 1970s, a good deal earlier than elsewhere in Europe. Beyond these very general conceptions of political economy, Hayek's influence cannot be attributed to his economic theories, which were little understood, or to his suggestions on policy, which were often disregarded. His prestige derived in part from his having been one of Keynes's earliest critics, seemingly vindicated by the discrediting of Keynesian economic policies in the 1970s, and in part from his having been the leading figure among the initially small number of free market economists and publicists in the early postwar years (Cockett 1994). His many political writings offered an uncompromising reaffirmation of the antistatist tradition, entirely unresponsive to the concerns of embedded liberalism. The Road to Serfdom (1944) ranks as one of the classic liberal statements against totalitarianism, but it has not aged well. Its

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claim that any move beyond the minimal state placed a society on the slippery slope to totalitarianism lacked plausibility, neglecting as it did the liberal political culture in twentieth-century Britain and France, which would become established throughout Western Europe after 1945. If Hayek provides the most wide-ranging case for neoliberalism, Milton Friedman is its most effective publicist—the new authority figure, displacing Keynes in the public discourse. Free to Choose (1980) written with Rose Friedman—the practical application of the principles advanced in Capitalism and Freedom (1962)—ranks among the most polemical of the liberal texts. Showing little awareness of the concerns of liberalism's critics, or for that matter historical scholarship, the Friedmans are able to present nineteenth-century England as a golden age. 18 Public health services, public education, consumer protection, and labor legislation are unable to achieve their goals and incapable of reform: salvation lies in a return to the minimal state (1980, 118-291). When all the institutions of the welfare state have been eliminated, any residual welfare concerns can be met through a negative income tax, though it is not explained why the majority of self-interested voters would agree to such generosity to the disadvantaged. The Friedmans do not engage with issues of liberal political theory, but they acknowledge the influence of "exciting work in the economic analysis of politics," that of public choice theorists such as Anthony Downs and James Buchanan (1980: 10). Public choice theory applies the economist's mode of analysis—the use of highly simplified, ahistorical, "parsimonious" models—to political processes and decisions. Political actors such as voters, politicians, and bureaucrats are viewed as "economic men," seeking to maximize their material interests, and occasionally other self-regarding, power-seeking interests.19 The ensuing simplification of politics complements and reinforces the simplification of social and economic issues and the neoliberal denigration of the state. Through thus buttressing neoliberalism, public choice may well be the most influential of the schools of contemporary political theory; it offers a ready-made, congenial political doctrine and contributes to the spread of the "economic discourse" in public affairs, discussed in Chapter 6, as well as to the devaluing of normative concerns and the cynicism toward politics and government that is readily evoked in most Western political cultures. Public choice may be included within liberalism, both for its association with liberal economics and its extreme analytical individualism.

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But it has little in common with liberal normative theory; in effect, it bypasses liberal political thought, presenting itself as empirical theory. Nonetheless, a narrow range of normative presuppositions, in particular a commitment to negative freedom, underpins its sceptical-to-hostile attitudes toward the state. THIRD PHASE: TOWARD INCLUSIVE LIBERALISM? If the ascendancy of neoliberalism can be likened to that of nineteenthcentury laissez-faire, contemporary liberal theory does not appear to be following the nineteenth-century pattern: the turn to social liberalism. This had been a response to the socialist critique but also an endeavor to promote the fuller realization of liberal values. The mystique of socialism has been destroyed, at least for the time being, by the collapse of communism and the practical difficulties experienced by the welfare state. The current rethinking of liberal values does not focus on one central issue but is prompted by a number of different developments in contemporary societies. This rethinking may eventually crystallize in a broader conception of liberalism, for which the currently favored term inclusion may provide an appropriate label, but at this stage it is necessary not to impose a premature impression of unity on a diverse set of ideas. The broadening of the scope of contending ideas within liberalism may be illustrated through four major developments in political theory, which are related to liberalism in different ways: John Rawls's reformulation of liberal theory; communitarianism; feminism; and multiculturalism. A Theory of Justice

The first major reformulation of liberalism since that of Hobhouse, John Rawls's A Theory of Justice (1971) does not directly engage with the issues between classical and social liberalism. It provides a rare example of a major work in political thought whose primary impetus was intellectual and philosophical, not political. Starting from dissatisfaction with the prevailing utilitarianism for its incongruence with certain valid moral intuitions and for failing to accord primacy to individual liberty, Rawls seeks a new justification for liberalism in an updated social contract theory—"generalized and carried to a higher order of

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abstraction" (1971, viii). The parties to the notional contract would not know which positions in society they would occupy. He postulates they would agree to grant unconditional priority to individual liberty and they would accept inequalities only to the extent that they benefit the least advantaged. 20 The book works out the implications of these principles. It is plausible to read A Theory of Justice as a defense of "American welfare state liberalism," that is, "the view that governments must open up to their citizens the widest possible range of civil rights and economic opportunities" (Ryan 1985, 105). But it is open to other readings: that it could authorize extreme inequalities (Arblaster 1984, 305) or that it fails to draw the radical conclusions implicit in its premises (Kymlicka 1990, 89). Arguably, however, in requiring inequality to be justified and in focusing on the least advantaged, it points broadly in a radical direction. But its major impact has not been in public affairs but in political theory. It stimulated a remarkable revival of normative theory in the United States and deeply influenced the agenda and style of theorizing.21 Among the many reactions to Rawls is Nozick's statement of the libertarian case for the minimal state, which provides a philosophical underpinning for neoliberalism (1974). At the other extreme is communitarian theory, whose starting point is the rejection of liberalism in its Rawlsian formulation (Sandel 1982; Hall 1994). Communitdrianism

For the communitarians the problem is Rawls's individualism: the "unencumbered" or "disembodied self' is an unhelpful fiction, since the individual is essentially the product of society and culture, not in a deterministic sense but in the sense that the ingredients for the individual's choices—the range of options envisaged and the norms subscribed to—are those that the culture and the society make available. That is to say, the individual's way of perceiving the world, the society, and the self depend on the language, the common understandings, and the lines of cleavage in the society, as do the individual's normative commitments (Kymlicka 1993). The individuals who enter into Rawls's social contract, it might be added, appear to be endowed with American liberal values. Communitarians, seeing morality as culture-dependent, reject liberal universalism. They see a need to sustain distinctive cultural and

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social institutions and solidarities, and they counter the liberals' rights and utilities by invoking obligations to the community. Communitarianism has a long historical heritage, in the first instance in Hegel and the early reaction against the Enlightenment; it often subordinated the individual to the state or promoted national or communal solidarity at the expense of individual rights. Contemporary communitarians, however, for the most part members of liberal societies, share many liberal values. For some of them the theory is an attempt to extend contemporary liberal thought rather than a thoroughgoing alternative. The communitarians' pleas to reinvigorate smaller communities, for example, are in accord with liberals' interest in civil society. De Tocqueville's depiction of American society has been invoked in this context (Taylor 1984, 197). Some theorists indeed identify themselves as communitarian liberals (Selznick 1992, xi, 371-386; Gray 1997, 15-19, 40-50). Philip Selznick acknowledges continuity with the English new liberalism of Hobhouse and the welfare liberalism of post-1945 but sees the latter as too constrained by its acceptance of the liberal doctrine of the neutral state. He calls for "a more robust idea of community" and of the public good and "more extensive responsibility" in personal and social life, endorsing the claim that the communitarian challenge "is not to replace liberal justice, but to improve it" (Amy Guttman, cited in Selznick 1992, 386). John Gray rejects liberal universalism—the "foundationalist" claim that "liberal regimes are uniquely legitimate for all human beings"—but defends liberal values and practices in the context of particular contemporary societies (1993, 284). Writing from "a communitarian liberal perspective [that] enriches standard liberal philosophy with the distinctive insights of communitarian thought," he argues that "individual autonomy presupposes a strong public culture in which choice and responsibility go together, and is realisable only as a common good" (1997, 15-17). Although such views are appealing, communitarian thought has not provided a rallying point for a broad-based challenge to neoliberalism. Feminism

The relationship between liberal and feminist thought is complex and tension-ridden, even though, especially from a liberal perspective, there is significant common ground. John Stuart Mill was a lonely exception among classical political theorists in questioning established gender

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relationships and seriously addressing the rights of women. Much of the feminist agenda, at least in the West, can be seen as liberal: representation for women, equal career opportunities, and challenges to male domination. The feminist movement can be regarded as demanding that liberal norms be extended to women on equal terms with men, not just in the narrowly political domain but in the personal domain, and it is difficult for liberals to argue against these claims. Relatively few feminists identify with liberalism, however; many opt for other philosophical and political approaches. Christine Sylvester classifies these as "standpoint," radical and cultural feminisms, socialism, and postmodernism but also notes that some feminists combine liberal with other approaches (1994, 30-67). The reference to the personal, however, points to one reason why feminism can be seen as raising issues of a different order from liberalism—and indeed from all traditional political philosophies. Arguably, feminist views of the individual, the household, and society differ fundamentally from liberal assumptions, drawing from other sources and above all from women's experiences in a variety of contexts (Mansbridge and Okin 1993). In contrast to most other strands in contemporary political theory, feminism forms part of a movement that is bringing about thoroughgoing social change. Even if it is regarded as a new discourse incongruent with liberalism, it nonetheless invokes key liberal norms while at the same time extending their scope. Its affinity is with radical or inclusive liberalism, with its concern for equal opportunity for the disadvantaged, not with neoliberalism. It is widely noted that the latter, with its acceptance of existing inequalities as given, and its preference for the unregulated market, tends to restrict women's employment and career opportunities. Feminism's main adversary, however, is not neoliberalism but male domination in all its forms. Multiculturdlism and the Recognition of Difference Minority rights is an old issue for liberalism that has recently returned in a new form: the rights of cultural minorities, and in particular of indigenous peoples, where the cultural distance between them and the dominant communities is greatest, and the closely related issue of the rights of minorities that have long been stigmatized, for example, on sexual grounds. One kind of liberal response is to reaffirm the adequacy of individual rights and norms of nondiscrimination: there should be no special rights for minority cultures, and individuals should have the

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right to choose among competing cultural claims (Kukathas 1997). But other liberals are impressed by the weight of argument that nondiscrimination may perpetuate systemic disadvantages, and thus there is a need for special rights—whether to ensure the sheer survival of minority cultures or to accord to the subordinated the recognition and respect that are a condition for the exercise of rights on equal terms with the majority (Young 1990; Kymlicka 1995; Tully 1995). As Andrew Linklater sums up the case: Claims for group-differentiated citizenship are compelling when the members of the dominant culture enjoy a right of communal selfdetermination which they deny to other groups within their midst. Recognising these claims is an important means of promoting the goal which past extensions of citizenship have been designed to realise: namely, the condition in which the systematically excluded feel more at home in the political community. (1998, 83) However, the issue remains contested: what if a culture supports illiberal practices, for example, and which minorities are to enjoy special rights and to what extent? The idea of inclusion is frequently invoked in this context—the inclusion of indigenous peoples or the especially disadvantaged as full members of the community. The term is widely used by those seeking an alternative to neoliberalism, but it is not yet clear whether it will come to be acceptable as a general term linking the different strands of contemporary liberal theory. It is true they have a certain mutual affinity and an affinity with social liberalism. Like social liberalism, feminism and multiculturalism follow the logic of extending liberal principles of equality, positive freedom, and autonomy to all those to whom they have been denied—thanks to the organization of economic life or to powerful social and cultural traditions. In terms of political practice, however, the contemporary strands of radical liberalism conduct a variety of struggles against a variety of adversaries. They do not yet provide a coherent alternative to neoliberalism.

CONCLUSION It has been argued that there is an underlying normative continuity in the tension between elitist and egalitarian strands of liberalism. From the outset until the later nineteenth century, this mainly took the form of

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a conflict over political rights between the propertied elites and the people at large—a conflict that was resolved early in the case of the United States, where the mass democracy posed no threat to property, but much later in Europe. However, the legitimacy of restricting power to the propertied elites was always open to challenge in the name of the basic liberal norm that government should rest on the consent of the people. In the second phase, starting with industrialization and the growth of commerce in the early nineteenth century and still continuing, a new axis of contention came to the fore. While all liberals remained committed to the freedom of the individual and the rejection of arbitrary power, laissez-faire doctrine took this to mean that the state should have no part in regulating economic activity, which should be left entirely to the free choices of individuals. Social liberalism countered by arguing for state regulation to the extent needed to enable all individuals to enjoy the right and freedom to develop their potential. Laissez-faire liberalism was not explicitly elitist, but in the view of its critics, it served to promote the interests of a new elite or class, the manufacturers, against industrial workers and, more generally, against socially beneficial initiatives. It could thus be regarded as the elitist liberalism of industrial society. A similar analysis, it will be argued, applies to contemporary neoliberalism. Social liberalism is egalitarian in the sense of extending meaningful rights and freedoms to all, the content of which varies in accordance with changing material and cultural conditions. Its claim to do justice to the full range of liberal values, in a way that neoliberalism does not, is well founded. New issues have been raised in the current period, especially by feminism and multiculturalism. The liberal response (tentatively labeled inclusive liberalism) may be regarded as an extension of social liberalism. It is held that the subordination of women and of certain cultural and other especially disadvantaged minorities is so deeply embedded in society as to require a rethinking of some established liberal norms in order to realize more basic liberal values. The turn to neoliberalism amounts to a drastic narrowing and foreshortening of the liberal vision, a reversion to a single value, negative freedom, a single perspective, that of political economy, and a preoccupation with the instrumental—with diminishing the role of the state. Before turning to the consequences of the ascendancy of this ideology in Chapter 5, it is necessary to complete the historical analysis by reviewing liberal thought and debates in international relations, which

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address some of the issues discussed in this chapter and also introduce distinctive themes of their own.

NOTES 1. Gray spells these out as "the moral primacy of the person," as against the collectivity; the equal moral status of all persons; the moral unity of the human species, as against according priority to historical or cultural norms; and the improvability of all social and political institutions. 2. These characterizations refer to several centuries. Studies covering shorter time periods suggest different emphases; for example, in a study of Britain (1919-1939) Michael Freeden sees the "core ideas" of liberalism as "liberty, a belief in gradual change, a commitment to legality and constitutionality and a concern for the general good" (1986, 4—5). 3. Contemporary usage often departs from the foregoing, as in the American usage of liberal as a term of condemnation of big government, taxand-spend policies, and the like. The text attempts to capture the characteristic flavor of the competing traditions over the long term. 4. While in itself a balanced, cautious doctrine, liberalism "is nonetheless a prolific generator of fanaticisms [when] one particular part of the liberal programme . . . has become obsessive and overriding" (Minogue 1963, 66). 5. Filmer's Patriarcha was not published until 1680, but many of its arguments appeared in his earlier works (Somerville 1991). 6. The political theorists of the day—James Harrington, Marchmont Needham, Henry Neville, and Algernon Sidney—did not engage in this debate but were unequivocally on the side of the leaders, as against "the confused promiscuous body of the people" (Skinner 1998, 31-32). It is not necessary here to enter into the debate whether they should be termed liberal (Patterson) or republican (Skinner). 7. This process had begun earlier. Arblaster cites the example of the Game Laws of 1670, which made it a crime to kill wild animals even on one's own property unless one had an income of £100 per annum from freehold property. In effect, wild animals and birds were treated as the property of the landed elite (1984, 171). 8. The variations among the states were highly complex; for convenient summaries see Lane (1959, 8-14) and Kleppner (1982, 8-9). 9. Manhood suffrage came much earlier in France and Germany, under Napoleon III and Bismarck, but within a constitutional framework that greatly restricted the power of the elected legislature. 10. For the triumph of the new "Manchester philosophy" over the "Westminster philosophy," see Halevy (1928/1955, 513-514). 11. According to Ricardo's theory, wages would fall along with the reduced price of corn, leaving wage earners no better off (Coats 1971, 29). 12. Ironically, it was when Malthus neglected the variability of conditions and posited a simple, universal relationship—his theory of population—that his

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ideas were influential, not when he reasoned in terms of complex and contingent relationships. 13. Positive freedom has many meanings (Berlin 1958). For its place in social liberal thought, see Kloppenberg (1986, 395-401). 14. Ross's account (1991, 98-122) brings out the limits of academic freedom in the United States in that period. Adams was "eased out" of his position at Cornell because of his public support for a railroad strike, and before receiving a new appointment at Michigan, he stated that his own labor program was based on individualism, not state regulation. Ely, publicly tried by the University of Wisconsin for supporting labor, denied the charges and conceded that public acts supporting strikers would disqualify him from a university appointment (Ross 1991, 116-117). 15. The Progressive movement had other strands, as Kloppenberg insists, but they were not social liberal. His account highlights similarities between certain Progressive thinkers (Dewey, Croly, and Lippmann) and European social liberals, but also brings out striking differences (1986, 298-415, 487-488). 16. In continental Europe the main political parties were social democratic and Christian democratic; in the U.K., Labour and Conservative. 17. The term classical liberalism was applied in retrospect to distinguish earlier nineteenth-century liberalism from the new or modern liberalism, here termed social liberalism, of Green and Hobhouse. It is taken here to include the political economists' laissez-faire within a broader political philosophy whose central value was the securing of individual freedom against arbitrary state power. Classical liberals were divided over democracy: Americans were mainly democratic, Europeans mainly elitist. As Alan Ryan expresses it: "[Classical liberalism] focuses on the idea of limited government, the maintenance of the rule of law, the avoidance of arbitrary and discretionary power, the sanctity of private property and freely made contracts, and the responsibility of individuals for their own fates" (1993, 293). However, Ryan's further characterization of classical liberalism as cautious, limited in its aims, and "sceptical about the average human being's ability to make useful advances in morality and culture" (1993, 293), appears to read back into the early nineteenth century some characteristic attitudes of mid-twentieth-century liberals. More plausibly, the classical liberals retained much of the optimism and meliorism of the Enlightenment, with its belief in progress and its commitment to reason, education, and science. The age of laissez-faire has also been called "the age of reform" and "the age of improvement." It is these Enlightenment attitudes, not Ryan's caution and scepticism, that characterize American political culture, which may reasonably be termed classical liberal. As noted above, laissez-faire entailed a drastic narrowing down of the spectrum of liberal values that had been articulated in the Enlightenment. 18. The Friedmans can write that the repeal of the corn laws ushered in three-quarters of a century of complete free trade lasting until the outbreak of the First World War and completed a transition that had begun decades earlier to a highly limited government, one

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that left every resident of Britain, in Adam Smith's words quoted earlier, "perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men." (1980, 56) Such a comment serves to confirm the ahistorical character of neoliberal economics (cf. Chapter 6). The Friedmans' account entirely overlooks the tum to "collectivism" and social liberalism later in the century and the social tensions that had prompted it. 19. "Public choice" is used here to refer to the school usually identified by that name, which is distinctive for insisting on the self-regarding and usually material character of the interests that are maximized. It may be distinguished from the "social choice" theory (of Kenneth Arrow and Amartya Sen, for example), with its place for social values and norms, which are neglected by the neoliberals (Stretton and Orchard 1994, 21-52). Both fall within the broader category of "rational choice" theory. The central ideas of the public choice theorists have long been familiar in political science through the study of bureaucratic politics and the "pluralist" account of democratic politics, as part of a broader analysis that qualifies the stark extremes of the public choice literature. 20. Rawls formulates the two principles as follows: First: each person is to have an equal right to the most extensive basic liberty compatible with a similar liberty for o t h e r s . . . . Second: social and economic inequalities are to be arranged so that they are both (a) to the greatest benefit of the least advantaged and (b) attached to offices and positions open to all under conditions of fair equality of opportunity. (1971, 60, 83) 21. Two contrasting reactions, one American, one British, are instructive. For Robert Nozick, the book is "a powerful, deep, subtle, wide-ranging systematic work in political and moral philosophy which has not seen its like since the writings of John Stuart Mill, if then. . . . It is impossible to finish [it] without a new and inspiring vision of what a moral theory may attempt to do and unite; of how beautiful a moral theory can be" (cited in Ryan 1985, 104). For Gray, however, Rawlsian liberalism is apolitical, and "the tradition of liberal theorizing it inaugurated has done little more than articulate the prejudices of an Anglo-American academic class that lacks any understanding of political life in our age" (1995, 1).

4 LIBERALISM IN INTERNATIONAL RELATIONS

[It] was never an afterthought . . . but the international dimension of liberalism was little more than the projection of domestic liberalism on a world scale —Stanley Hoffmann, "The Crisis of Liberal Internationalism"

Stanley Hoffmann's view is widely shared, and at the level of fundamental values it is broadly correct: international liberalism seeks to realize the core liberal values globally, aspiring to a world in which all people enjoy liberal rights and freedoms. But Hoffmann understates the distinctiveness of the issues that arise from the attempt to realize those values internationally. Liberalism rejected the traditional practices of international politics: the balance of power, alliances, spheres of influence, conquest, and colonization. In their place it advocated the rule of international law, international organization, free trade, nonintervention, and national self-determination. Liberals tended to perceive war either as unnecessary, caused by misunderstanding, or else as the result of the aggressive acts of despotic rulers. Democracy came to be supported not only in the name of liberal values but as the most reliable means of securing peace. Traditionally, the central tension was between liberal aspirations and the practices of power politics. Today, when those aspirations are being translated into the construction of a liberal world, issues relating to cultural imperialism and autonomy achieve a new salience. The driving force has been normative—to realize liberal values worldwide—but it was their distinctive views about how these values might be promoted that provided the starting point for liberal theorists of international relations. Following Kenneth Waltz (1959), liberal the55

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ory is often seen as ascribing causal primacy to variables at the level of the state, as against the individual or the international system: in Waltz's terms it is a second-image theory. For example, according to one liberal theory, the internal transformation of states through democratization is necessary if the international system is to be transformed from one of power politics to a peaceful world governed by liberal norms. We shall see that there is reason to question this second-image view of international liberalism. According to another liberal theory, one kind of international system—a world of free trade—would have powerful effects on states, not only enhancing wealth but also providing incentives for political liberalization and the maintenance of peace. Such a system presupposes a certain level of economic development and interdependence, but not that states be democracies. The nature of the regime is not crucial; it is sufficient that governments can be persuaded that free trade would serve their interests, as liberals have no doubt it would. The first section of this chapter traces the development of the liberal view of international relations up to the founding of the League of Nations and inquires to what extent the tension between the two liberalisms discussed above is reproduced in the international context. The second section discusses the discrediting of liberal international theory in the half century following the 1930s and its resurgence in the 1990s. The third section pursues the question of contending liberalisms in contemporary international relations theory, and the fourth and final one outlines the variant of liberalism that constitutes the ideology guiding the present endeavor to construct a liberal international order.

FROM THE ENLIGHTENMENT TO THE LEAGUE OF NATIONS Locke, the major figure in the crystallization of liberalism as a theory of the legitimate state, has no such role in the formation of liberal international theory. In the tradition of the doctrine of the just war he advocates norms of restraint states ought to observe, but has no confidence they will do so. He appears to endorse the view that the primary concern of those forming a government is "to secure themselves against foreign force," and he accords wide discretion to governments in the conduct of foreign policy. His economic thinking is mercantilist (Cox 1960, 123-130, 171-180). It is true that his critique of the right of conquest is distinctively liberal (Locke 1690/1965, 431^146), but he offers

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no conception of a world ordered in accordance with liberal principles. For the most part, his thought on foreign policy falls within the realist tradition. The core ideas of international liberalism date from the later eighteenth century. They are identified with no single thinker but express the outlook of a generation—indeed expressed almost casually by French Enlightenment writers as a natural extension of the liberal principles they espoused in internal politics. Just as they opposed the arbitrary rule of absolute monarchs, they assailed the practices of power politics—conquest, the balance of power, alliances, and secret diplomacy—that they perceived as aimed at maintaining such rule. The glorifying of military virtues was "a dangerous prejudice, a carry-over from barbarism, a remnant of the former chaos" (D'Argenson, quoted in Gilbert 1961, 59). Conquests should not be praised for heroism but regarded as crimes (Condorcet, in Gilbert 1961, 60). The balance of power did not, as claimed, promote peace but disturbance, shocks, and explosions (Gaillard, in Gilbert 1961, 60). It was necessary to replace "the blind passions of the princes" with the rule of reason: "They considered the introduction of a new and peaceful era in foreign policy dependent on a reorganization of domestic policy" (1961, 62). Foreign policy could then be based on moral principle and conducted through open diplomacy. Other French thinkers foreshadowed an alternative, economic approach to realizing the liberal vision. The idea that war no longer pays in a new interdependent world was already being widely expressed (Howard 1978, 24). For the physiocrats the key to the liberal transformation of international relations was to persuade the rulers to adopt free trade. "They were no opponents of despotism: on the contrary, they were confident that the new order could be introduced quite easily with and by means of the prince's absolute power" (Gilbert 1961, 64). If the philosophes remained at the level of general principle, early American ideas on foreign policy, formulated under the pressures of the colonies' steeling themselves to demand independence from the British Empire, show a realist appreciation of the immediate constraints of unequal power but also offer the first glimpses of a liberal conception of the goals of the newly independent state. Realism dictated that the Americans sought the support of Britain's main rival, France, but even so, the Americans rightly judged they could avoid any long-term "entangling alliance" (Graebner 1964, 11-13, 27-30). There was a surprising congruence between the radical program of Thomas Paine—

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renouncing alliances, free commerce—and the initial thinking of realist John Adams on the proposed treaty with France: "no political connection . . . no military connection . . . only a commercial connection" (Gilbert 1961, 49). And the aim of U.S. diplomacy after independence was to achieve commercial treaties on equal terms with the main European states; an expression of American interests, this was also in line with the liberal views of the philosophes (1961, 66-75). In America's particular situation, the promotion of liberal principles coincided with the national interest. From today's perspective two classic statements toward the end of the century—in the contrasting styles of the publicist and the philosopher—stand out as landmarks in international liberal thought: those of Thomas Paine and Immanuel Kant. It has been said that the relevant pages of Paine's The Rights of Man provide a synthesis "put together with so much lucidity, so much force, that virtually every liberal or socialist who has written about foreign policy since then has been able to provide little more than an echo of Paine's original philippic" (Howard 1978, 29). It would be truer to say that Paine gave full voice to the Enlightenment outlook but also brought out latent tensions within it. He expressed the typical confidence in reason, science, education, and the advance of civilization; the condemnation of monarchical rule, conquest, and standing armies; and the advocacy of freedom of commerce as the way to achieve international understanding and peace. But his commitment to democracy was atypical; claiming that rule by the people was necessary in order to remove the principal cause of war—the monarchical system—he went so far on occasion as to support armed intervention to overthrow it, confident that little force would be required (Paine 1791/1969, 166-169, 232-239; Walker 2000). If Paine has been neglected as an international thinker,1 Kant has been subject to many interpretations (Gallie 1978, 8-12; Hurrell 1990). Martin Wight's account of Kant as the archetypal figure in what he terms the revolutionist or universalist tradition in international thought is now discounted by most commentators. 2 The current view of Kant as founder of the democratic peace theory is also open to question. Whereas Paine is a forthright exponent of this idea, Kant shares the more typical eighteenth-century aversion to democracy, viewing it as despotic. The first of his conditions for peace is that states have republican institutions—constitutional provisions for the freedom and legal equality of citizens and the separation of the executive and legislative powers of government (1795/1970, 99-102)—but the franchise would

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be limited to independent (propertied) citizens (Walker 2000, 67). Kant assumes that democracy and constitutionalism are incompatible. Kant is not a second-image theorist, but he is equally concerned with the international system. His second condition for peace is that states form a confederation whose members renounce war against one another. He sees the realization of peace as a moral imperative, and the history of the moral development of civilization as offering hope that it can be attained, but only after protracted and costly struggles (Hinsley 1963, 62-80; Gallie 1978; Hurrell 1990). This last insight distinguishes Kant from the characteristic optimism of earlier Enlightenment thinkers. He endorsed most of the liberal themes of the time, however. He acknowledged the importance of commerce as a force for positive changes in attitudes and morality, condemned conquest and standing armies, and asserted more categorically than most liberals an absolute norm of nonintervention (1795/1970, 93-130). Bentham added little to the eighteenth-century stock of ideas on liberalism in international relations, but his practical turn of mind led him to formulate them in a way that virtually defined the foreign policy program of British liberals up to World War I: free trade; arms reductions; refraining from secret diplomacy, colonial acquisitions, and continental entanglements; and more distinctively, the establishment of an international court (Howard 1978, 33-34). He was confident of the power of public opinion and confident that England and France could lead the way forward. His writings have the character of a manifesto, not yet addressing the issues that would divide liberals as they sought to implement their principles. Since there were no major innovations in nineteenth-century international liberal thought, it is convenient to view the topic in terms of a number of issue areas. One recurring issue was the principle of nonintervention in the internal affairs of other states, which was practiced to a substantial extent by the United States and more intermittently by British governments. Liberals sympathized with movements seeking to introduce constitutionalism or national independence against foreign rule, for example, the movement for Greek independence, the Hungarian liberal revolution in 1848, and the Polish claim to independence. But should they offer more than moral support, and should liberal governments intervene in such situations? The first major debate, little noted in Europe, was over U.S. nonintervention in the revolutions against Spain in Latin America. Against calls to intervene in the cause of freedom, there were arguments of prudence but also of liberal princi-

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pie. Outsiders should not claim to judge the rights and wrongs in a civil war, and outside interference in the name of liberty was likely to lead to domination (Vincent 1974, 109). In Britain the principle of nonintervention was formulated in its most unqualified form by Richard Cobden, in terms of British interests but more fundamentally of liberal principle. The basic norm that people have the right to choose their o w n government requires that outside states not intervene. Liberal Britain could not object to interventions by t h e c o n s e r v a t i v e m o n a r c h i e s if it i t s e l f p r a c t i c e d i n t e r v e n t i o n . Moreover, effective liberal institutions could not be established through outside interference but only by the efforts of the people themselves (Vincent 1974, 4 5 - 5 4 ) . J o h n Stuart Mill, on the other hand, saw c o m p l i c a t i o n s . W h i l e agreeing with the latter point, h e distinguished between the case of purely internal oppressive rule and "a people struggling against a fore i g n y o k e , or a g a i n s t a n a t i v e t y r a n n y u p h e l d b y f o r e i g n a r m s " (Bramsted and Melhuish 1978, 369). Intervention to uphold nonintervention was justified; the question was whether it was prudent. It would not h a v e b e e n p r u d e n t f o r E n g l a n d to i n t e r v e n e a g a i n s t R u s s i a in Hungary in 1849, but England and France together could and should have done so, and indeed might well have deterred Russia if they had (1978, 370). A more forthright challenge to Cobden, f r o m a liberal involved in such a struggle, was Mazzini's charge that his was "an abject cowardly doctrine: atheism transplanted into international life, the deification of self-interest" (Vincent 1974, 61). Mazzini also expressed a broader objection to English liberalism, an early perception of cultural imperialism: All these soi-disant cosmopolitans . . . as soon as any question of action and therefore of organisation arises, invariably seek to make the centre of the movement their own country or their own city. They do not destroy nationality, they only confiscate all other nationalities for the benefit of their own. [They carry] the assumption of a permanent, exclusive moral and intellectual initiative, which is quite as dangerous to those people weak enough to admit it, as any other form of usurpation. (Howard 1978, 34; emphasis in original) If British liberals were unaware of this kind of reaction, they were fully aware of cultural differences in relation to non-Western societies. Mill saw these as justification for imperial rule. The principle of nonin-

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tervention applied only to nations at the same level of civilization. "Barbarians" cannot be relied on to observe rules or to apply reciprocity. They benefit from foreign rule: only thus can they experience moral improvement. "Barbarians have no rights as a nation, except a right to such treatment as may, at the earliest possible period, fit them for becoming one" (Bramsted and Melhuish 1978, 367). Mill is remarkably uncritical in his assumption that colonial rulers will act with the kind of responsibility that he ascribes to them. This, however, was another area of liberal contention. A long tradition of aversion to imperial expansion culminated in J. A. Hobson's powerful and wide-ranging critique, Imperialism (1902). But whereas earlier liberals had viewed colonial conquest as a residual practice of the old aristocratic-military order, Hobson identified contemporary imperialism with manufacturing, commercial, and financial interests at the core of the liberal order itself. Unlike Mill, he questioned the case for British rule in India, and he wholly condemned the undermining of a great civilization in China. But this was a difference over the hierarchy of cultures: in relation to the "lower" cultures, Hobson shared Mill's paternalistic attitude, proposing a form of international government to regulate Western exploitation of resources in the "backward" countries, but he saw no need to provide for the representation of the peoples themselves. A collective international mandate would, it appears, exorcise the demons he had cataloged so exhaustively (Long 1996). This can be seen as one of several instances of liberalism's complacency over differences in power in international relationships. 3 The most significant of these is the case of free trade, which as noted earlier "began as a purely utilitarian and piecemeal movement. . . [and] ended as a doctrinaire force making for complete freedom of trade, backed by a whole philosophy of commercial liberalism" (Thomson 1950, 77-78). Free trade would not only enhance the prosperity of one's own country, it would also promote cooperation, friendship, and peace among nations. For Cobden, "commerce is the grand panacea, which, like a beneficent medical discovery, will serve to inoculate with the healthy and saving taste for civilization all the nations of the world . . . not a merchant visits our seats of manufacturing industry, but he returns to his own country the missionary of freedom, peace and good government" (Bramsted and Melhuish, 1978, 356). And even Palmerston could echo the theme, enumerating as reasons for free trade: "It is that the exchange of commodities may be accompanied by the extension and diffusion of knowledge—by the interchange of mutual benefit engen-

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dering mutual kind feelings . . . It is that commerce may freely go forth, leading civilization with one hand, and peace with the other, to render mankind happier, wiser, better" (Bourne 1970, 255). Even though, like Palmerston, Cobden was aware that free trade "conveniently suited . . . the commercial supremacy of Great Britain in mid-century" (Bourne 1970, 84), there was no indication that nineteenth-century liberals acknowledged the "imperialism of free trade": that is to say, that trade among highly unequal countries at unequal stages of development might serve to establish relations of dominance or might eliminate traditional industries without necessarily bringing commensurate benefits. Yet such examples soon became apparent (Gallagher and Robinson 1953). In some instances, such as Argentina, free trade perpetuated a social order that preserved the dominance of a rural elite at the expense of other sectors of the society; in other cases, notably the Ottoman Empire and China, it was massively disruptive (Smith 1981, 21-35). Like its domestic counterpart, laissez-faire, freetrade doctrine reinforced the interests of the stronger party (in this case British manufacturers and consumers), while its confident assumption of mutual gains precluded any examination of its actual consequences for the weaker party. But whereas liberal thought came to acknowledge the domestic costs of laissez-faire and its integral association with power relationships, it was and largely remains silent on the dark side of free trade. The turn to social liberalism was not replicated in international thought.4 From the outset nationalism presented problems for liberalism. The principle that came to be termed national self-determination was first adopted in the early stages of the French Revolution, when certain areas outside France's frontier were consulted through plebiscites to determine whether the people in question supported union with France (Cobban 1944, 5). Subsequently, however, liberals were alarmed by the imposition of revolutionary government by armed force in much of Europe, and English liberals remained suspicious of nationalism. Thus, while there were strong liberal sympathies for certain nineteenth-century movements for national independence, there was no general assertion of the principle of self-determination and no exploration of the dilemmas to which it could give rise. In 1848 and for some years thereafter, it was assumed that liberalism and nationalism—movements for national independence or unity— were closely associated, expressions of the same basic principle: the right of the people to determine under which sovereign state, as well as

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which government, they would live. But the process of German unification—not through the unsuccessful liberal attempt in 1848 but through wars undertaken by Bismarck's Prussia, a state with only a partially liberal constitution—challenged the assumption of a natural affinity between liberalism and nationalism and split the German liberal movement between the National Liberals—those willing to support Bismarck—and those who remained opposed to his mode of rule. Nationalism also came to divide British liberals between the "little Englanders" and the "liberal Imperialists." More generally, it gradually became clear that nationalist movements were by no means necessarily liberal and indeed could often be illiberal. National self-determination came to be the basic norm of the Treaty of Versailles (1919), but not because it had become an imperative of international liberalism. Indeed, it was rejected by a number of prominent liberal thinkers (Howard 1978, 78-80). Woodrow Wilson initially favored the preservation of the Austro-Hungarian Empire (Cobban 1944, 13); his Fourteen Points offered no more than "autonomous development" to its various nationalities and to those in the Ottoman Empire. Only in the case of Poland was it stipulated there should be an independent state encompassing the territories "of indisputably Polish populations." It was not until October 1918 that Wilson declared autonomy insufficient: the peoples themselves should decide. By this time, "wherever there was a minority or a subject nationality, national armies were gathering and national governments were being set up." Selfdetermination was, in effect, a fait accompli appropriately enough achieved by the peoples themselves before the peacemakers began their work (Cobban 1944, 15). In the light of this history it is not surprising that liberals had given little thought in advance to the problems of national minorities and irredentism that emerged as soon as the principle of self-determination was applied in the particular conditions that existed in eastern Europe. The Fourteen Points and the establishment of the League of Nations amounted to an attempt to implement liberal ideas that had been current for a century and a half. Points one to four called for open diplomacy, freedom of the seas, the removal of economic barriers, and arms reductions. The proposal to establish an international court dates back to Bentham. The idea of creating an international organization to preserve peace that would retain the sovereign states as its members was less familiar; although proposed by Kant, it became a focus of liberal discussion only in the later nineteenth century (Hinsley 1963, 133-149).

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Underpinning these principles and institutions were the assumption that the main states would be liberal democracies; confidence in the power of reason and public opinion and the underlying harmony of interests; and rejection of the balance of power as the guiding principle for the new international order. The issues that came to the fore in nineteenth-century international liberal debates are not readily construed in terms of the contest between elitist and radical liberalisms, discussed in Chapter 3, but an essentially similar tension was no less significant. In the international milieu this took the form of the liberalism of the powerful—not infrequently in the guise of the politically and culturally "advanced"—at odds with the aspirations of the disadvantaged. This sense of superiority was expressed most openly in the assumption of the right to rule over the uncivilized—an assumption challenged only much later by colonial nationalists employing liberal arguments against uneasy liberal imperialists. The debates on intervention were more nuanced. There was an awareness that intervention by the powerful in the name of liberal values could lead to dominance, not genuine independence, but little acknowledgment that the nonintervention of the powerful was open to interpretation as narrow self-interest rather than principle. In other words, it is difficult for the liberalism of the powerful to avoid damaging the interests or offending the sensitivities of the weak, especially if the powerful are confident of their virtue and unaware of their impact on others. The most striking instance was the impact of free trade on weak, preindustrial, or dependent non-Western societies. The debates on international organization, in particular on whether sanctions were necessary to enforce international agreements, exposed similar issues in a different context—the role of the great powers as against the equal rights of sovereign states. The greater the perceived need for sanctions, the stronger the position of the international elite— the great powers (Hinsley 1963, 133-149). National self-determination, on the other hand, was prima facie a case of liberalism from below, since crucial decisions were assigned to the people as a whole, but even here the implementation of the principle favored the more "advanced" of the aspirants to nationhood or those who had been first to stake their claim—the Czechs over the Slovaks, for example. In the international context elitist liberalism has many guises. It is the liberalism of the powerful in varying contexts, and it is striking how often this took the

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form of what came to be termed "soft power" (Nye 1990, 32-34) derived from the claim to social and cultural superiority.

LIBERALISM VS. REALISM Tensions within international liberal thought have attracted relatively little attention. They have been overshadowed by the opposition between liberalism and realism, the tradition that provided a rationale for those international practices liberalism rejected so emphatically from the outset. The first major theoretical critique of international liberalism, E. H. Carr's The Twenty Years' Crisis (1939), was prompted by the failure to achieve the liberal transformation of international relations through the League of Nations, which became apparent in the 1930s. For the next half century realism prevailed in the international relations discipline even more clearly than among foreign policy makers, but by the 1980s liberalism was again in contention; in the 1990s it was pervasive in the foreign policy discourse and was making a bid for ascendancy in the discipline. This section reviews these developments and inquires how soundly based is the present reassertion of liberalism. The clash between liberalism and realism in the nineteenth century, mainly in Britain and the United States, took the form of the juxtaposition of opposing positions and debates over specific policies, not a systematic engagement with theoretical issues. Classic statements of liberal and realist positions on intervention, war, and human rights, for example, may be found in the debates between Clay and Adams, Cobden and Palmerston, and Gladstone and Disraeli. But these were political manifestos, not expositions of theory. It is open to debate to what extent American policy was, like Palmerston's, essentially realist, colored by liberal rhetoric, or a genuine fusion of the two. In Britain it is arguable that liberalism became predominant in foreign policy debates in the later nineteenth century (Holbraad 1970, 162-204) and in the years b e f o r e 1914 realist p o l i c y m a k e r s f o u n d t h e m s e l v e s constrained by a liberal public discourse, with Foreign Secretary Grey torn between the two. Overall, however, the norms and expectations of the great powers were only marginally affected by the advance of liberalism. Thanks to America's pivotal position in the 1919 peace negotiations, the liberal rhetoric drowned out the realist undertones, even

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though realist-minded national leaders were able to attain many of their specific goals. Though it was seriously weakened by America's opting out, the League of Nations provided a focal point for the diplomacy of reestablishing order and for the liberal discourse that prevailed, at least in the Anglo-Saxon world, even though few diplomats fully subscribed to the liberal vision. The League's spectacular failure to prevent aggression in the 1930s, however, shattered that vision. It was in this context that E.H. Carr formulated his telling critique of its theoretical foundations.5 Acknowledging intellectual debts to Niebuhr and to Mannheim, Carr sought to demolish the premises of international liberalism both through intellectual argument and through locating the doctrine in terms of the sociology of knowledge. Carr's themes have become familiar to students of international relations: his scorn for the doctrines of the harmony of interests and the efficacy of reason and public opinion, and his critique of the liberals' neglect of power and of the passionate pursuit of conflicting interests. He derided attempts by liberal commentators to explain the cataclysmic events of the 1930s in terms of the stupidity or immorality of particular leaders, and he depicted the League of Nations as undermined by the utopianism and perfectionism of those who had sought to deny it the pragmatism and flexibility that might have enabled it to operate effectively. He drew on the sociology of knowledge to present international liberalism as an early, Utopian phase of a new science of international relations destined, as in the other sciences, to give way to a realist phase; he also used it to argue that liberalism, like all political doctrines, serves to legitimize particular interests, in this case the interests of the dominant status quo powers. In a liberal political culture Carr's critique retains its relevance—above all, his comments on the liberalism of the powerful. Similar wide-ranging critiques of liberal thought appeared after 1945, in particular Hans Morgenthau's Scientific Man vs. Power Politics (1946) and John Herz's rather more nuanced Political Realism and Political Idealism (1951). The realist alternative was by no means an endorsement of Realpolitik nor a simple reaffirmation of tradition. These authors grappled with ethical issues; while they denied that states should be held to the same moral standards as individuals, the question of the appropriate moral norms was a major issue for them, as for the other classical realists of their generation, notably George Kennan, Arnold Wolfers, and Raymond Aron. The most comprehensive realist statement, Morgenthau's Politics Among Nations (1948)—more system-

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atic but less nuanced than the critiques—became the most influential text for more than a generation, in effect constituting the paradigm for the new discipline.6 The eclipse of international liberalism is not difficult to explain. The League of Nations had been thoroughly discredited, and the breakdown of order in the 1930s, the roles played by Hitler and Stalin, and the emerging Cold War ruled out any return to the sanguine assumptions of Bentham or Wilson. Although liberal rhetoric greeted the founding of the United Nations, its Charter incorporated the kind of concessions to realism that Carr had regarded as essential, and in any case its powerlessness in the Cold War soon undermined any residual liberal optimism. International liberalism remained important in the American policy discourse, but there appeared to be no way of reviving it in the discipline. It was by no means self-evident, however, that in rejecting liberalism the discipline would single-mindedly embrace realism. It is unusual for an academic discipline to draw its concepts and theories directly from a sphere of practical activity, such that it becomes, in effect, a rationalization of long-standing practices. In doing so, moreover, it neglected Carr's reservations: "Consistent realism excludes four things which appear to be essential ingredients of all effective political thinking: a finite goal, an emotional appeal, a right of moral judgment and a ground for action" (1946, 89). A few scholars such as Quincy Wright, Ernst Haas, and Karl Deutsch stood out against the trend, and the "English school," in the first instance Charles Manning and Martin Wight, began to develop an alternative framework according to which international relations theorizing could be viewed as a debate among "three traditions"—realism and what Wight termed rationalism and revolutionism. But these theorists were slow to publish; the core texts of the discipline, offering the paradigm that could structure students' understanding of the new subject, were provided by the realists, above all Morgenthau, while the realist scholar-diplomat George F. Kennan was the key figure in the formulation of "containment," the doctrine that guided U.S. foreign policy through the Cold War. Kennan was one of those who depicted the U.S. foreign policy tradition as a contest between the realist wisdom of the founding fathers and the idealistic and legalistic errors of those who sought to apply the maxims of America's domestic liberalism in the lawless international milieu (Kennan 1951). This kind of dichotomy also appealed to Morgenthau, for whom the alternative to liberalism was to be found in

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the traditional principles of statecraft, grounded in the realities of international politics. The task of theory was to establish the rational essence of statecraft and to show that its principles explained the successes and failures of diplomacy and exemplified more general laws of political behavior. The realists were driven by an urgent sense of political mission—-to overcome the pervasive errors and illusions in the American political culture and place its foreign policy on sound foundations— even more than by the intellectual ambition to establish a new academic discipline. Their paradigm was admirably suited to both purposes, whereas the subtler reflections of the English school were not. If liberalism was banished from the discipline, however, it survived in American foreign policy. The Truman Doctrine was not a statement of balance-of-power realism but a commitment to support freedom against totalitarianism. The Cold War always had a major ideological dimension, as its denouement made clear, but this had been evident in episodes such as the Vietnam War, when realists such as Morgenthau opposed U.S. involvement. The most surprising omission in postwar realist theory, however, was the economic dimension of international relations—in contrast to Carr, for whom it was an integral part of his analysis. Yet the commitment to construct a liberal international economic order, which preceded the Cold War, was fundamental to U.S. policy and was pursued as single-mindedly as containment, and the construction of the OECD economic order stands out increasingly as a key achievement of American foreign policy. Yet with a few notable exceptions, international relations theorists have paid minimal attention to it and its implications for international order or to the shift from the embedded liberalism of the early decades to the unconditional priority for "market forces" in the ensuing neoliberal phase. For U.S. policymakers there was no sense of a conflict between realism and economic liberalism. By privileging national security— "high politics"—and leaving economic relations to another discipline, realist theory obscured a central aspect of American power and perpetuated a liberal-realist dichotomy that misrepresented U.S. policy. For Dean Acheson, as for Palmerston a century earlier, there was no doubt that free trade was in the national interest and no scruple about using liberal rhetoric to mobilize support for policies initially conceived in realist terms, which then acquired a (liberal) life of their own. It is therefore not surprising that when international political economy began to be developed as a major subdiscipline in the 1970s, this

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soon began to appear more like a broadening of realism than an attempt to displace it. "Complex interdependence" brought a wider set of actors and interests into focus, and "regimes" postulated a greater degree of international cooperation than a crude realism might expect. But much of the debate was conducted within the realist problematic: for example, whether regimes could ever do more than facilitate cooperation among actors whose interests required it, or whether their effectiveness depended on the presence of a hegemonic actor (Krasner 1982). Some regime theorists were more innovative (George 1994, 112-117), but there was no attempt to reassert the broader claims of liberalism against realism. On the contrary, theory in the 1980s was dominated by Kenneth Waltz's reformulation of realism (1979), which in seeking to overcome the anomalies that had been widely acknowledged in Morgenthau's formulation, took realist theory, now termed neorealism, to a new level of abstraction and was in turn extensively debated (Keohane 1986). This debate broadened the range of contending theoretical perspectives in the discipline (Ashley 1986; Cox 1986; Ruggie 1986). The liberal debate with neorealism, however, remained within narrow parameters that entailed the acceptance of most of its basic assumptions (Baldwin 1993)7 The ending of the Cold War provided a setting in which the realist hegemony was exposed to more fundamental challenges from a number of directions. The failure of realist scholars to anticipate the end of the Cold War underlined a long-standing criticism that realism was a static theory, unable to explain systemic change. Its normative commitment to the status quo and its positivist epistemological foundations were attacked by an increasing number of scholars, not only those identified with critical theory and postmodernism. And liberal scholars were emboldened by the resurgence of liberalism in the public discourse to revive liberal theory's challenge to the realist paradigm. The discourse of the late 1980s was colored by the "liberal triumphalism" with which Francis Fukuyama greeted the ideological victory of liberalism over marxism—even before the end of the Cold War—as the "end of history." For Fukuyama (1989) this signaled the end of a centuries-long era of ideological conflict. It did not preclude violence in the parts of the world still "mired in history," but for the economically advanced states he foresaw the "common marketization" of the world of liberal democracies. For him realism was a superficial

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approach to international relations, due to its neglect of internal politics and above all its blindness to the significance of historical change (1992, 252-265). The case for a liberal challenge to realist theory on traditional Wilsonian lines was spelled out by Charles Kegley in the 1993 presidential address to the International Studies Association. Kegley drew attention to the surprising number of developments that suggested Wilson's ideals, long dismissed as unrealistic, were now at the center of the international agenda and arguably in the process of being realized. First was the spread of democracy, along with research supporting the democratic peace—the proposition that democracies do not make war against one another. He pointed to the new emphasis on economic cooperation; the movement toward free trade; increased support for international law; progress toward disarmament, in particular the agreement on "deep cuts" in the superpowers' strategic forces; the new salience of human rights; the revival of the United Nations; and more generally, the increasing recourse to multilateralism. Only with respect to national self-determination did he express a reservation: the principle was indeed Wilsonian but might need to be rethought in the light of its potentially destructive consequences (Kegley 1993). Nineteenthcentury liberals would not have been surprised. In contrast to Fukuyama, Kegley did not proclaim the arrival of a new era but rather sought to persuade the scholarly community to take the possibility seriously and to design its research agenda accordingly.8 Many theorists are taking up the challenge, which raises two major issues. The first concerns the character of the current period in international relations. Have the underlying conditions in world politics changed so fundamentally that liberal norms and practices can now replace, and are indeed replacing, the realist norms and practices that have predominated in the modern states system? The upshot of the preceding discussion is that the reasons for regarding realism as a general theory or paradigm for international relations had more to do with historical circumstances than compelling theoretical argument. It is better regarded as a theory that highlights and legitimizes certain traditional norms and practices and offers plausible explanations of international behavior in certain periods. If this is so, if realism is historically contingent, then the issue raised by the proposition that it is no longer adequate as a paradigm for international relations in the present period, momentous though it is for the discipline, is less fundamental than is usually assumed.

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The second issue is whether liberalism should replace realism as the successor paradigm. It may be the main alternative to realism in the public discourse, as it has been for two centuries, albeit challenged by socialism for a time. But this is not sufficient reason for enshrining it as the new paradigm in the academic discipline. There is one notable liberal argument for doing so—that of Andrew Moravcsik, discussed below.

CONTEMPORARY LIBERAL INTERNATIONAL RELATIONS THEORY In contrast to the normative concerns of contemporary political theory discussed above, liberal international relations theorists, preoccupied with their long-standing struggle against realism, have been mainly concerned with empirical theory. This has prompted extensive research as liberals sought to persuade a realist-dominated discipline that liberal norms and practices are assuming a central place in the current international system. Liberal values and assumptions, taken for granted in the political culture, may provide the ultimate rationale for this theorizing but are not the driving force. There is no engagement with the normative issues raised by neoliberalism, the strand of liberal thought guiding the attempt to construct a post-Cold War order. Normative theory is undertaken by a separate group of scholars whose work has little impact on the discipline as a whole. Liberal theorists are accumulating an impressive array of arguments against realism, insofar as it claims to provide a general theory of international relations, as indeed are theorists of other schools. There is no overarching liberal theory comparable to Waltz's neorealism, but separate strands of theory are loosely linked in that they draw on traditional liberal ideas. Robert Keohane (1990) distinguishes three categories of contemporary international liberalism: republican, commercial, and regulatory. Mark Zacher and Richard Matthew (1995) add three further categories: military, cognitive, and sociological liberalism. Andrew Moravcsik (1997), in seeking to construct a unified liberal paradigm, integrates most of these within a common framework but excludes institutionalism—Keohane's regulatory liberalism—which he regards as a form of realism. This section reviews these strands of empirical liberal theory in order to assess the effectiveness of their challenge to realism and also to ascertain their normative assumptions, especially in relation to the issues raised by the neoliberal order. It then discusses the

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views of contemporary normative theorists relating to international order. Republican

Liberalism:

The Democratic Peace

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The surge of interest since the 1980s in democratic peace theory has been described as "the most striking development in liberal international theory in the postwar period" and as having "breathed more life into liberal international theory than any other body of scholarly writings" (Zacher and Matthew 1995, 123). It is also the strand of the theory that has entered most strongly into public discourse, especially in the United States, where the claim that democracies do not go to war against one another provides both an idealistic and a national interest rationale for the policy of promoting democracy. The thesis of the democratic peace, it should be noted, is not that democracies fight fewer wars than authoritarian states—although some authors make this further, contested claim (e.g., Rummel 1995)—but that democracies do not fight one another. This, according to one of the most frequently cited claims in the discipline, "comes as close as anything we have to an empirical law in international relations" (Levy 1989, 88). It has been confirmed by many quantitative studies: a long-standing liberal assumption is now supported by extensive research. The correlation is impressive, but attempts to explain it have proved curiously unsatisfying. The most prominent explanations are the cultural/normative hypothesis that democracies follow the same norms of peaceful conflict resolution in their mutual relations as in their internal politics, and the institutional hypothesis that democratic elections ensure that those who would suffer the costs of war must be persuaded it is justified—which in the case of conflict with other democracies committed to peaceful procedures would be unlikely (Russett 1993, 24-42). The explanations are plausible but not compelling, and are not incorporated into a more comprehensive theory. They make the bold assumption that differences between peoples— assuming they can express their will politically—can always be resolved peacefully. And they are open to the objection that the observed peace among democracies may be due to other factors than their shared democratic institutions. The theory does not engage with the normative issues raised by the neoliberal order. First, taking contested elections to be the sole essential criterion for democracy (Russett 1993, 14—16), it reaffirms the minimalist democracy of today's public discourse. This facilitates empirical

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testing but does nothing to promote a more critical understanding of democracy; rather, by enhancing the salience of the simple dichotomy democracy/nondemocracy, it deflects attention from issues that may be of greater concern from the standpoint of liberal values as a whole. Second, while the theory renders more plausible the liberal vision of a world of peaceful states, it deflects attention from the most prevalent source of political violence at the present time, namely internal conflict, with all the deprivation and mass violation of human rights entailed in civil war. The incidence of such widespread violence in the 1990s raises disturbing questions as to the meaningfulness of any "order" in which this is possible, but the image of the democratic peace provides a certain reassurance that there is an order and that it is benign. Commercial Liberalism In its original form the old liberal idea that free trade, or more broadly, interdependence, would ensure peace was discredited by the outbreak of war in 1914 among states whose levels of interdependence were unprecedented and arguably comparable to those of the present. The idea has not died, however, but is now reformulated with qualifications. The experience of the 1930s is invoked to support the view that extreme economic nationalism and protectionism are conducive to war, while an open trading system and increasing economic interchange provide major incentives to maintain peaceful relations (Keohane 1990, 178— 179, 186-190; Zacher and Matthew 1995, 124-126), an argument frequently heard in relation to China. Thus reformulated in terms of incentives to peace, not guarantees, commercial liberalism has long been part of the public discourse. Current liberal theorizing has provided refinement, but there has been no innovation comparable to democratic peace theory. The position is a little more complex with respect to the effects of commercial liberalism on welfare. International relations theorists for the most part are reluctant to question the orthodox economists' view of the overall benefits from trade, but they often make significant qualifications. We have noted the weight accorded to social values in Ruggie's (1982) concept of embedded liberalism. Gilpin sees contemporary liberal theory as incorporating a considerable number of the claims of economic nationalism. 10 And Keohane notes that the free movement of capital can impose major welfare costs on societies, especially the most vulnerable (1990, 191). The normative potential of views of this kind

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has not been developed in the discipline and thus has little impact on the public discourse, especially when compared with the impact of the strong normative stand on liberalization taken by the economics profession. The Obsolescence of War11 Where there has been some theoretical advance on an old idea is the updating and broadening of Norman Angell's claim (1914), frequently misrepresented, that war had become economically irrational—an idea that overlaps with interdependence but now focuses on the overall cost/benefit calculus of contemporary war, not just on economic accounting. There is no definitive statement of the current view (though Kay sen 1990 is a good starting point), but rather a convergence of three interrelated ideas. First, the utter irrationality of all-out war between nuclear powers has long been evident but was played down in the interests of credible deterrence during the Cold War, which locked the superpowers into acute conflict before the implications of nuclear weapons had become clear. It is now evident that nuclear powers will have to resolve future conflicts without recourse to nuclear weapons (the scenario of strictly limited nuclear strikes assumes a level of risk taking well beyond that of virtually all leaders of major states). Second is John Mueller's argument (1989) that there has been a secular change in attitudes during this century such that war among Western industrial societies has become "subrationally unthinkable"—it cannot be entertained—a thesis that raises the obvious question of how widely diffused these Western attitudes have become. Finally, there is the economic argument that even if industrialized states were prepared to go to war, any conceivable gains could be achieved with far less cost and risk through a few years of economic growth. The same reasoning could be extended to include states with a serious commitment to economic development (Richardson 1997a). These hypotheses could lend themselves to incorporation into a broader theory, for example, that of industrial society or international systemic change or both. While these arguments refer only to certain kinds of s t a t e s nuclear, Western, industrialized, and those committed to development— they become more significant to the extent that the major states are included within these categories. Even so, as with democratic peace theory, they assume stable states with secure political regimes, an assumption that cannot safely be made in much of the contemporary

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world. This may be tacitly acknowledged by those theorists who have put forward the idea of a bifurcated world: on one side a liberal-democratic, norm-governed "zone of peace," on the other a Hobbesian world of violence and Realpolitik (Goldgeier and McFaul 1992). Such an image recalls the elitist liberalism of the early nineteenth century, where the liberal rights and freedoms were enjoyed only by a minority, and internationally the world was bifurcated between civilization and barbarism. Just as those liberal states were fully prepared to use as much coercion as necessary to maintain law and order, so today's liberal states, however peaceful their relations among themselves, are quite prepared to resort to coercion in their relations with the global "periphery."12 Ideas on the declining acceptability of war may be seen as reflecting and articulating major changes rather than, like neoliberalism, seeking to shape the world order in a particular way. They are not prominent in the public discourse but influence its unspoken assumptions. They do not necessarily imply an elitist liberalism, but like the democratic peace theory, they do nothing to counter the elitism of the dominant discourse, and in some versions they share with it the complacency that permeates current Western thinking on international relations. Institutional Liberalism

The fourth variant, institutional liberalism, might appear to have greater radical potential, but as developed in the contemporary American discipline, its implications are broadly conservative. Institutional liberalism derives from Kant's idea of an organization of states committed to the maintenance of peace. As the weaknesses of the League of Nations and subsequently the United Nations became clear, this school of thought became attracted to functionalism, a more indirect approach to restructuring the international system. According to this theory, a network of institutions designed to promote international cooperation in specialized, technical fields would gradually transform the international environment in the direction of cooperation and peace. An underlying assumption of institutional liberalism, Keohane suggests, is that international behavior cannot be explained solely in structural terms— whether geopolitical power, capitalism, or commercial interdependence—but must take account of agency: the choices that determine what rules, conventions, regimes, and formal organizations will regulate international relations at any given time (1990, 181).

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Keohane, the leading theorist of "neoliberal institutionalism," notes that it "borrows as much from realism as from liberalism." It shares the realist assumptions that states are the principal actors in world politics, that they pursue self-interest, that they rely on self-help in order to secure their interests, and that relative capabilities are important. The main difference between the two schools is over the significance of institutions (1993, 271-272). For liberals, institutions significantly enhance the potential for cooperation; they do not merely facilitate the realization of (perceived) shared interests but may change the ways in which interests are perceived. It is sometimes suggested that the central theoretical debate in the 1990s was between neorealism and neoliberal institutionalism (Baldwin 1993)—a tightly focused debate on the scope for international cooperation, the significance of international regimes, and the priority states accord to absolute versus relative gains. Little remains of the traditional liberal challenge to realism. Presumably because this theoretical debate is conducted within such narrow parameters, neoliberal institutionalism has had limited influence on public discourse, even though the role and potential of international institutions remains a major issue, and the concept of international regimes has come into common usage in the policy community. A further reason for its limited resonance may be the specialized knowledge it appears to presuppose: knowledge about the way in which the flow of information, prevailing expectations, and the capacity to monitor commitments depend on institutional arrangements (Keohane 1989, 2). For Keohane empirical social science is not integrally linked to normative thought; his personal commitment to the value of individual freedom is "not particularly relevant" to his analysis of international relations (1989, 10). Yet on closer examination it becomes evident that neoliberal institutionalism is associated with certain normative assumptions of a conservative kind. The conservatism implicit in this particular theory is not that of neoliberalism, with its subordinating of governmental institutions to the market and thus its tendency to favor haves over have-nots, which Keohane explicitly rejects. 13 It is the broader conservatism that Susan Strange brings out in her discussion of the regime concept—the unquestioning priority accorded to order, "not justice or efficiency, nor legitimacy, nor any other moral value" (1982, 487^188). It has been observed that, just as economists think well of markets, so do institutionalists of institutions, but the relatively uncriti-

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cal endorsement of established institutions points to a deep-seated conservative normative stance. David Long's critique of the "Harvard School" brings out other normative limitations of neoliberal institutionalism. Whereas earlier liberals such as Hobhouse saw the state as a means toward the realization of the freedom and welfare of individuals, contemporary institutionalists remain at the level of the state (1995a, 492-496). Even at that level, their assumption that states are egoistic actors limits their understanding of international cooperation to cases where the coordination of separate state interests is possible. There is no place for nonegoistic goals, let alone for wider human interests. Cognitive

and Sociological

Liberalism

Zacher and Matthew identify two further strands in contemporary liberal theory: cognitive and sociological. Alternatively, they could be seen as variants of institutionalism. The former takes up traditional ideas concerning reason, education, knowledge, and progress, ideas that have underpinned liberal international relations thought. This area of theory remains fragmented, giving rise to specialized research, for example, on how states "learn" and how they develop relevant organizational capabilities. A second area is the epistemic community, the idea that in complex contemporary societies specialized knowledge-based actors, usually forming transnational networks, play an increasingly important role (Zacher and Matthew 1995, 129-131). An optimistic liberal reading will identify these developments with progress; through other theoretical lenses they might appear elitist, technocratic, or special-interest based. Sociological liberalism refers to nongovernmental actors and transnational relations between societies rather than governments. It includes, for example, earlier studies by Karl Deutsch on communication flows and the development of transnational shared values, as well as associated work on regional integration and, more recently, studies of nongovernmental organizations (Zacher and Matthew 1995, 132-133). These developments suggest that the societal underpinnings for a liberal international order may be in process of construction. Up to a point, nongovernmental organizations (NGOs) are more broadly based than the governmental epistemic communities, leaving open the question where they fall on the spectrum between elitist and radical liberalism.

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Toward an Integrated Theory?

Taken together, the various strands of contemporary liberal theory amply support the claims that the practices and norms of international politics are diverging increasingly from those postulated by realist theory and that there is far more empirical support for liberalism than its critics acknowledge. Heterogeneous strands of theorizing, however, fare poorly as theory in comparison with neorealism: in place of its elegance and parsimony they offer at best an overlapping array of theories lacking a common foundation. One theorist, Andrew Moravcsik, has sought to remedy this deficiency, not by replicating neorealism's extreme parsimony but by incorporating the major variants of liberalism within a coherent structure. Parsimony remains a criterion for evaluating theory but not the overriding one. In return for admitting a degree of theoretical pluralism, he claims, liberalism can explain aspects of international politics that realism cannot account for: in particular, variations in foreign policy, long-term historical changes, and the distinctiveness of contemporary international politics. Moravcsik makes the even larger claim that liberalism, thus understood, is not merely an alternative paradigm but is "analytically prior" to realism (1997, 515-516). He indicates he is not concerned with liberalism as an ideology or historical tradition but with liberal theory "in a nonideological and nonutopian form appropriate to empirical social science" (1997, 513-514). For Moravcsik the "basic liberal insight" is the primacy of internal societal and political forces in international relations. "Societal ideas, interests and institutions influence state behavior by shaping state preferences, that is, the fundamental social purposes underlying the strategic calculations of governments. For liberals, the configuration of state preferences matters most in world politics—not, as realists argue, the configuration of capabilities" (1997, 513). The three core assumptions are that "the fundamental actors in international politics are individuals and private groups," that "states represent some subset of domestic society, on the basis of whose interests state officials define state preferences," and that "the configuration of interdependent state preferences determines state behavior" (1997, 516-521). In other words, the anarchical structure of the international system does not have the determining role postulated by neorealist theory, and the sources of foreign policy are to be found in societies rather than states; what passes as the national interest is, in the last analysis, the interest of "some subset" of the society.

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Moravcsik offers a persuasive counter to neorealism, but his redefinition of liberalism presents three major problems. First, like any radical redefinition of terms, it proposes a usage so much at variance with previous discourse as to generate confusion. It is true it has become common in the international relations discipline to identify liberalism as a second-image theory, in Waltz's terms—one that ascribes causal primacy to variables at the level of the state, as distinct from the international system or the individual (Waltz 1959). But for Waltz, liberalism was one instance of second-image theorizing, not second-image theory as such. Socialism was a second instance, and there could well be others, such as the historical doctrine of the "primacy of domestic politics" in foreign policy, which need not be identified with liberalism or socialism. Moravcsik redefines liberalism such that it is identified with the doctrine of domestic primacy and holds that marxism can be incorporated within it (1997, 522), but this does such violence to the normal understanding of the differences between these traditions as to raise serious questions over the fruitfulness of such a reconceptualization. Second, Waltz's characterization of liberalism as a second-image theory is also open to serious questioning. We have seen that certain liberal theories—-for example, those relating to free trade, interdependence, or international institutions—have always offered third-image hypotheses and continue to do so. That is to say, they explain major international outcomes in terms of variables at the level of the international system. When Moravcsik claims that neoliberal institutionalism, as a third-image theory, falls within realism not liberalism (1997, 536538), his reasoning is not persuasive even though theorists such as Keohane have acknowledged that it has much in common with neorealism. If the notion of a uniform causal primacy for either second- or third-image variables is implausible—if causal dynamics may work in either direction, as liberal theorizing taken as a whole appears to suggest—then Moravcsik's basic characterization of liberal theory is on weak ground. Third, Moravcsik's dissociating of empirical liberal theory from the normative liberal tradition presents serious problems. It is one thing to claim, as Keohane does, that a particular empirical theory is unrelated to the theorist's personal values, but quite another to present a reformulation of liberal theory as a whole quite consciously in isolation from the normative liberal tradition (1997, 548). This prompts the question of how, if at all, his reformulation relates to the normative issues that have been central to that tradition. It appears to be solely an intervention in

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the debate between liberalism and realism and then in the narrowest form, the debate with neorealism. By disparaging normative theory as Utopian or ideological, Moravcsik appears to signal a status quo bias that would align his theory with realism rather than the liberal tradition. And he finds no place in liberal international theory for the central role of neoliberalism in the contemporary construction of world order. Moravcsik's theoretical tour de force, then, offers certain insights but not a satisfactory overall framework for integrating the various strands of liberalism. His Waltzian premise is faulty, his provocative reformulations lead too readily to the construction of artificial dichotomies, and above all, he excludes too much. It is perhaps not surprising that empirical liberal theory does not directly engage with the normative issues raised by neoliberalism. Even as empirical theory, however, contemporary liberalism is at fault for overlooking the character of the international order that today's political and economic elites are seeking to construct in the name of liberalism. Moreover, in bypassing this development while highlighting certain positive features of the present international system, liberal theorists of all schools are, as we have seen, contributing to the legitimizing of that order. The approach of the normative theorists is quite different. Normative Theory

Normative international relations theory has regained momentum during the past two decades. For most commentators the great divide is between liberalism and communitarianism (Brown 1992a; Thompson 1992; Morrice 2000). For liberalism, sometimes termed cosmopolitanism, individual rights and freedoms are universal, and the corresponding obligations extend to the whole of humanity. For communitarianism, values, rights, and obligations are meaningful only within particular communities, which might appear to equate with the cleavage between liberalism and realism, but this is only partially the case. Not all realists are communitarians: some deny that ethics has any relevance to international relations, and others appeal to utilitarianism. Moreover, just as there can be a communitarian liberalism in internal affairs, where a society's values are liberal, so there can be a communitarian version of cosmopolitanism if communities are not seen as morally exclusive but rather as overlapping, extending from the local through the ethnic and national to humankind as a whole. In contrast to the empirical theories just noted, liberal normative

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theory does not consist of well-defined strands of theorizing, each related to different issues of long standing.14 This discussion will focus on four issues and approaches that highlight the normative distance between the projected neoliberal international order and an alternative radical conception: global humanism, global distributive justice, human rights, and feminist theory. The cluster of values termed global humanism (Gurtov 1994) was a normative synthesis formulated in the 1970s by a transnational group of scholars participating in the World Order Models Project (Mendlovitz 1975; Falk 1987). What held the group together, despite cultural and intellectual differences, was its shared commitment to political democracy, human rights and anti-imperial geopolitics in contemporary affairs and the willingness of participants to subscribe to some variant of a world order future based on peace, economic well-being, social and political justice, and ecological balance. (Falk 1987, 19)

Agreement on values came about through a process of convergence as the views of Western and third-world participants responded to one another's concerns. Falk's own "characteristically Western liberal" concerns came to encompass issues of war, poverty, and environmental quality, while the initial focus of third-world participants on development and nonalignment broadened to include issues of war/peace and the environment, and later, human rights and democracy (1987, 19-21). In its most recent study (Falk 1995) the project remains primarily concerned with world-order values and the normative changes that would be required for their realization, not with institutional development. The values are essentially social liberal; the classical liberal freedoms are little discussed but are part of the taken-for-granted norms of human rights. There is greater emphasis on the economic and social rights that remain contested in the West. A pioneering attempt to move beyond the ethnocentrism implicit in Western liberal thought, the project opens up the possibility that social-liberal values could provide a foundation for a genuinely global, not just a Western liberal international order. The other schools of thought address a single value or issue area. The first of these, global distributive justice, is a rare instance of a major normative issue that is new—one perceived only in the second half of the twentieth century. At a time of increasing affluence in the West it was widely seen as unacceptable that vast numbers of people in

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the third world lacked adequate nutrition, clean water, basic health services, education, or all of these. Starting from this moral judgment, philosophers and international relations theorists have struggled with the issue of global distributive justice: what is it, what rights and obligations does it entail, and how can it be achieved or at least approached in practice? Although normative theory cannot in itself answer the last question, it is not one that, after a generation of scorn for utopianism, theorists can simply set aside. For cosmopolitan theory national boundaries provide no justification for neglecting the rights and interests of those elsewhere; indeed, it is difficult to justify a privileged situation for nationals. Theorists have offered several different rationales for a radical position on the demands of global justice. Charles Beitz (1979), appealing to Rawls's principle that inequalities are justified only if they benefit the least advantaged, sees this as requiring a massive reallocation of resources—a norm unthinkable, because unfeasible, in an earlier age but practicable under today's conditions of interdependence. Utilitarian theory can lead to similar conclusions if the utility of reaching a reasonable level of subsistence is weighted more heavily than the marginal gains or losses of the relatively well-off. A third approach, that of Onora O'Neill (1986), rejecting both rights-based and utilitarian claims, is a Kantian argument in terms of the obligations of individuals as moral agents to other individuals, irrespective of distance. In leaving the way open for additional duties within one's nearer community, she allows for practicability, a condition Hoffmann (1981) insists upon for moral (not just realist) reasons.15 At the other end of the liberal spectrum Hayek states one kind of neoliberal position in uncompromising fashion. Defining justice as referring only to the conduct of individuals toward one another, he dismisses conceptions of justice relating to the ordering of society and its institutions as meaningless, "primitive thinking . . . anthropomorphism" (1984, 63, 70): It clearly has no application to the manner in which the impersonal process of the market allocates command over goods and services to particular people: this can be neither just nor unjust, because the results are not intended or foreseen, and depend on a multitude of circumstances not known in their totality to anybody. (1984, 70) It is not clear to what extent neoliberals follow Hayek's reasoning as a whole, but the exclusion of ethical considerations from the working of

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the market—like the realist exclusion of morality from international relations—expresses a widespread assumption. Justice, whether in its Rawlsian or its everyday sense, has no place in the neoliberal discourse. Other typical neoliberal assumptions include the denial of any obligation on the part of Western peoples or governments toward the impoverished elsewhere, and the invoking of the virtues of the market in ways that require textual analysis before the overall normative position can be discerned. There is no fully articulated neoliberal position on global distributive justice that could be juxtaposed with the social-liberal literature. The same is true of the next issue area, human rights—arguably the core issue on which contemporary liberals are divided. Political controversy since the 1970s has raised new questions or at least presented old ones in a new form. For most theorists the Cold War-oriented debate between Western advocates of civil and political rights and non-Western supporters of social, economic, and cultural rights did not provide a fruitful starting point for addressing questions such as whether rights were universal or culturally determined or which rights were more fundamental. A notable contribution on the latter question was Henry Shue's Basic Rights (1980). He defines basic rights as those whose enjoyment is essential for the enjoyment of all other rights: "everyone's minimum reasonable demands upon the rest of humanity . . . justified demands the denial of which no self-respecting person can reasonably be expected to accept" (1980, 19). He identifies three such rights: personal (physical) security; subsistence (adequate food, clothing, and shelter; clean air and water; and basic health care); and freedoms necessary to secure the former two. Within the Western discourse on rights he devotes much of his book to countering objections to subsistence rights. Underlying his argument is the perception that whereas historically the resources were not available to secure subsistence rights for all, neglect of these rights in the contemporary world is a matter of political choice. John Vincent, writing against the background of the neoliberal ascendancy in the mid1980s, makes an even stronger plea for the priority of subsistence rights. A human rights policy that ignores what, "in terms of sheer size and lack of moral ambiguity, seems the most pressing rights issue in the world today—the claim of the starving and malnourished to be properly fed—would rightly be regarded with derision" (1986, 145). Jack Donnelly, while endorsing Shue's critique of the Western neglect of subsistence rights, cautions against attempts to single out a short

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list of basic rights for general priority. This devalues other rights, the denial of which can be almost equally damaging to the secure enjoyment of rights, and even where the few basic rights are observed, "people could be left living anomic, degraded lives. . . . All human rights are 'basic rights' in the fundamental sense that systematic violations of any human right preclude realizing a life of full human dignity" (1989, 41). Martha Nussbaum takes up the theme of human dignity in arguing for a different way of conceptualizing the issues—in terms of human capabilities rather than rights (2000, 70-86, 96-101). This could inter alia provide a novel vantage point for addressing the issue of universality versus the cultural relativism of rights, which has also sparked extensive theoretical debate (e.g., in Van Ness 1999). Standpoints relating to multiculturalism are not yet as clearly defined in the international debate as in the internal, but there is a new liberal awareness of the issue of cultural imperialism, and there are attempts to formulate "a form of universalism that is sensitive to pluralism and cultural difference" (Nussbaum 2000, 8).16 A number of commentators presenting a classical or neoliberal standpoint limit themselves to reaffirming the claim that the only true rights are the civil and political, enshrined in the early liberal tradition. They refrain from engaging with issues of subsistence rights or cultural relativism (Jackson 1990, 42^47; Robertson 1998). Following Maurice Cranston (1973), the categorical moral right to life or liberty is contrasted with the right to paid holidays; economic rights are depicted as merely aspirational. A second argument is that of practicability: political rights can be secured by legislation or by a government's refraining from arbitrary actions or restrictions on freedom, whereas in many countries the securing of economic rights may be impracticable.17 Feminist theory does not introduce new issues so much as it sharpens the perception of what is entailed in the preceding issues. Nussbaum reminds her readers of the multiple ways in which women in most of the world experience inequality. "They are less well nourished than men, less healthy, more vulnerable to physical violence and sexual abuse," and much less likely to be literate, still less to have higher educational qualifications. They face intimidation or discrimination in seeking to enter the workforce or participate in political life. "All too often," she sums up, "women are not treated as ends in their own right, persons with a dignity that deserves respect from laws and institutions. Instead, they are treated as mere instruments of the ends of others" (2000, 1-2).

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As we have seen, not all feminist thought is identified with liberalism, but liberal feminism, in underlining how liberal international theory is concerned with values at the level of the individual (Waltz's "first image"), expresses these values in ways that suggest real, multidimensional persons, not the abstract individuals of rational choice theory. The normative theorizing of recent decades signals a notable revival of the radical liberal tradition. As the prospect of a world ordered in accordance with the norms of "liberalism from above" takes on a new immediacy, radical theorists open up a new range of issues by projecting a world guided by the values of "liberalism from below." They provide criteria for evaluating the neoliberal global project and also the normative adequacy of empirical liberal theories. They face two challenges. The first is to formulate a theory, even more comprehensive than Moravcsik's, that would offer a unified perspective on current liberal theories, both normative and empirical. The second is to translate their theories into a program capable of winning political support. Contemporary radical theory needs a Thomas Paine even more than an Immanuel Kant.

CONTEMPORARY LIBERAL IDEOLOGY18 The ideology through which contemporary elites seek to construct and legitimize a certain kind of liberal international order is far removed from the values espoused by the normative theorists. Its predominant strand is neoliberalism, the political-economic doctrine that gained ascendancy in the 1970s and 1980s over the embedded liberalism of the early postwar decades, as discussed in Chapter 3. Certain Wilsonian themes relating to democracy and human rights are formulated such that they complement the neoliberal doctrine. After 1945, at a time when Wilsonian liberalism was proving ineffective at the global level, embedded liberalism was successful in guiding the construction of a durable socioeconomic order in the West. Its successor, neoliberalism, is now the driving force worldwide, but the Wilsonian strand has an important legitimizing function, seeking inter alia to smooth over potentially disruptive tensions between market economics and democratic politics. International neoliberalism, like its internal counterpart, is largely a revival of pre-Keynesian political-economic thinking. Keynes had sought to subordinate the international economy, like the internal, to overriding social and political goals. While supporting economic liber-

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alization, embedded liberalism allowed for exceptions and delays to alleviate its social costs; above all, it permitted the control of capital flows. For neoliberalism the free movement of capital is an unproblematic good: investment flows to where it is most profitable, economic efficiency is maximized, and the discipline imposed by financial markets ensures that governments pursue sound economic policies. The universal benefits of free trade are taken as given. There is no intellectual engagement with those who question these benefits in particular cases; they simply do not understand economics. The most striking feature of neoliberal doctrine is its universalism. The same principles apply everywhere, irrespective of any country's particular situation or state of development. They rest on suspicion of governmental "intervention" in the economy and a general presumption that market outcomes are better than state-induced outcomes, that government failure is more serious than market failure. The best-known application of these assumptions is the "Washington consensus," the standardized policies imposed by the International Monetary Fund and the World Bank since the early 1980s on all those countries dependent on their assistance (Taylor 1997). These countries are required to take measures for the "liberalization" of the economy: the reduction of barriers to trade and foreign investment and, more broadly, of controls over capital movements; the removal of subsidies and labor market regulations; the privatization of government corporations, including banks; and the breaking up of monopolies. Such a market-friendly package, it is assumed, will bring about the necessary "structural adjustment" that will make the economy more efficient, enabling it to compete in international markets. These, of course, are essentially the same measures neoliberalism prescribes for Western economies. Here, too, liberalization and privatization provide universal remedies for manifold ills. In the face of chronic unemployment in Europe, as in Australia, and economic stagnation in Japan, neoliberalism prescribes a common remedy: deregulation. Britain and above all the United States, with their relatively high rates of growth and low unemployment, are held up as shining examples—other reasons for their relatively favorable situation in the 1990s being disregarded. In Europe the remedy is to deregulate the labor market, in Japan the financial system. Privatization is a universal recipe for increased competitiveness. Moreover, in the world of globalization there is no alternative; it is futile to attempt to evade the imperatives of technological change or to

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defy the principles of economics. The doctrine of the Economist and like-minded commentators bears a remarkable resemblance to that of the same journal more than a century ago. In the 1990s the ideology acquired a second dimension, so far as the non-Western world was concerned. Much was now heard of governance: the need to develop governmental institutions that would provide the necessary environment for the market to function effectively. If the model for the economy was drawn from the textbook, the model for governance was drawn from an idealized version of Western governmental institutions. Thus corruption, autocracy, and privileged special interests were to be replaced by transparency, legality, and government subject to the scrutiny of "civil society." Deregulation, it was recognized, did not remove the need for prudential regulation—of financial institutions, for example. Western NGOs were encouraged to assist in promoting appropriate institutions and associations such that civil society could begin to play its assigned role (Williams and Young 1994; Young 1995). Initiatives along these lines were especially prominent in Africa, but it was the financial crisis in Southeast Asia and Korea that focused attention on the extent the international financial institutions, and the IMF in particular, were prepared to require major institutional changes as a condition for providing emergency financial assistance (Feldstein 1998). The ideology also prescribes significant changes in Western governmental institutions. Broadly speaking, the public sector is to be remodeled in accordance with the practices of the private sector—at least as those practices are perceived by neoliberal reformers. Numerous services are to be contracted out, governmental departments subjected to continuing financial stringency, and senior appointments subject to short-term contracts and assessed on "performance." The public service culture is to be replaced, ostensibly by a market-oriented culture, but in the view of critics, the values of independence and professionalism are giving way to politicization. The silences, the tensions glossed over in neoliberal discourse, are just as striking as those in the original laissez-faire doctrine. The following chapters examine, in particular, the silences relating to power, history, and ethical issues. Most paradoxical is the former: here is an ideology tirelessly promoted by the powerful that excludes all reference to power. This is closely linked to the disdain for historical experience: debates on the (nineteenth-century) "imperialism of free trade" serve to

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highlight the significance of unequal power relations, and the history of industrialization casts serious doubt on the efficacy of the neoliberal formula for development. Silence in the face of the ethical issues raised not just by increasing inequality but by the persistence of extreme deprivation in a world of increasing wealth confirms that this is indeed an ideology that serves to promote reassurance and solidarity among the ruling elites, not one that seeks mass appeal.19 Two of the contemporary Wilsonian themes are especially relevant to the construction of a neoliberal international order: democracy and human rights. By the time of the Wilsonian synthesis the earlier liberal reservations about democracy had been set aside. Nineteenth-century liberal states had supported liberal movements elsewhere as an expression of ideological affinity, and the same was now true of democracies. Support, however, rarely extended beyond expressions of moral and political solidarity. After 1945 Western opinion welcomed the emergence of democracies and deplored dictatorships, but during the Cold War the nature of the regime counted for little in Western policies so long as it was not communist. Since the Cold War there has been a major rhetorical shift toward the promotion of democracy, especially in U.S. foreign policy. Democracy is presented as an unproblematic good and is closely associated with peace and human rights. Promotion of democracy, however, has not been pressed to the point of endangering relations with major nondemocratic states (Carothers 1995); realists have no cause to complain that national interests are being sacrificed in the name of the democratic ideal. Likewise, the promotion of neoliberal economics takes precedence over that of democracy. Chile, Mexico, China, and until recently, Indonesia are hailed as economic success stories; Western governments easily override public concerns about the character of regimes. Democracy is promoted in Africa as better for development than corrupt dictatorships, but the criteria for financial assistance are economic. It is true that in response to Indonesia's financial crisis in 1997-1998, the IMF proposed structural and institutional changes that weakened key supporters of the authoritarian regime, but this appeared to be a side effect of a policy of requiring recipients of assistance to remodel their economies along neoliberal lines. The assumption that liberal democracy is an unproblematic good leads to a further narrowing of political discourse, over and above that imposed by neoliberal doctrine. It is evident that to assess non-Western

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governments by the sole criterion of whether they are elected in a process that meets certain minimal democratic standards is extraordinarily superficial, yet this is the logical outcome of a public diplomacy that elevates this criterion above all others. Moreover, as discussed in Chapter 5, the conception of democracy presupposed in this discourse is a highly limited one, essentially Joseph Schumpeter's view of democracy as open competition among contending elites. Accordingly, concerns about the state of what might be termed "really existing liberal democracy" in the West itself (cf. Brown 1992b) are marginalized—concerns that electorates have less and less influence over issues important to them and that governments are remote and responsive only to powerful elites or to impersonal economic forces. It is true that, along with the promotion of democracy, the current ideology gives equal prominence to human rights. Once again, this is a narrow conception of human rights, one that excludes economic, social, and cultural rights, and in practice the concerns over civil and political rights are selective. It is not only that abuses in some countries are highlighted far more than in others, but also that certain cases such as highprofile activists attract media and governmental attention while the extensive denial of rights at lower levels often escapes attention. Moreover, like the promotion of democracy, concern for human rights tends to be subordinated to economic ends. In support of this priority it is argued that economic growth will lead to liberalization, which offers the best protection for human rights in the long run. This is a convenient argument that at best is a probabilistic judgment and, like similar arguments in neoliberal discourse, justifies neglect of immediate evils in the interests of long-term benefits that, except in the closed world of the doctrine, are necessarily uncertain. Contemporary liberal ideology, then, is close to the end of the spectrum denoted by liberalism from above. It is a doctrine promoted by those with ample resources that propounds certain liberal ideals, but its central message is the virtue and necessity of the unregulated market. There are striking resemblances to a certain form of realism. Both seek to reinforce the interests of the powerful by enjoining accommodation to them; they share a common disregard for the powerless, a common disdain for historical reflection, and above all, the subordination of ethical concerns to the "realities" of power. The major contrast is that realism places power at the center of its theorizing, whereas neoliberalism shows its respect for power through its total silence. Realism confronts

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the issue of power and privilege head-on, but neoliberalism presents the analyst with the task of uncovering the power relationships behind the ideology.

CONCLUSION The main conclusions from this chapter may be summed up as follows. First, over two-and-a-half centuries liberalism has developed from a seemingly Utopian challenge to the deeply entrenched realist practices of international politics to the principal source of international norms in the political as well as economic domain. In the international relations discipline the hegemony realism has enjoyed since the 1930s has been broken, and liberalism is currently its main challenger. Second, although the tension between elitist and radical liberalism is not so immediately salient as in internal politics, on closer examination it is no less significant. This is especially the case where the assertion of universal liberal norms tends to obscure differences in power, culture, or level of economic development, contexts in which the norms tend to strengthen the position of the powerful or the culturally or economically advantaged. The tension comes to the fore, however, in the current differences between neoliberalism and radical normative theory. Third, with the exception of democratic peace theory, contemporary liberal international relations theory does little to shape public discourse. Empirical theory provides the framework for research that tends to support and refine familiar liberal presuppositions, and its underlying normative assumptions and language confer a degree of legitimacy on the projected neoliberal order. Radical liberal values are strongly reasserted in normative theory but with little resonance in the international relations discipline, and still less in the public discourse. Finally, the currently dominant ideology, neoliberalism, provides an extreme instance, now in a global setting, of the liberalism of advantaged elites, an ideology of the powerful. The promotion of democracy and human rights, potentially more radical, is conceptualized in ways that reinforce rather than challenge the neoliberal ascendancy.

NOTES 1. Thanks to Thomas Walker's reconstruction of his international thought, Paine can now be assessed for the first time. Though he was not a sys-

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tematic theorist, Paine showed a high level of consistency in the views expressed in his numerous works, and he drew theoretical distinctions—for example, between the monarchical system of government and the acts of particular monarchs (Walker 2000, 55-56 and passim). 2. For Wight, revolutionists "believe so passionately in the moral unity of . . . international society that they identify themselves with it and . . . experience an overriding obligation to give effect to it . . . their international theory and policy has a missionary character" (1991, 8); they endorse not only a right but a duty to intervene in other states (1991, 9). Kant shares their universalism but not their salvationism (see also Hurrell 1990). 3. The neglect of power more generally is, of course, a central claim in the realist critique of liberalism, discussed below. 4. Hobson is a partial exception: he sought to establish conditions through internal reform that would enable European peoples to enjoy the benefits of free trade (Long 1995b). A clearer exception is the "new protection" in Australia, where Prime Minister Deakin linked protection to a social agenda. 5. It has been shown that Carr's depiction of the views of interwar liberal "Utopians" is largely a caricature (Long and Wilson 1995) and that the discipline's image of the "great debate" in which realism vanquished (liberal) idealism contains a large element of myth. The present account cannot examine this latter issue in detail but seeks to place the discipline's self-image in its historical context. 6. According to Francis Fukuyama, Morgenthau's textbook "was perhaps the single greatest influence on the way Americans thought about foreign policy during the Cold War" (1992, 246). 7. See the discussion of liberal institutionalism below. 8. The present author's inquiries into systemic changes affecting the likelihood of major war, discussed in Chapter 2, were undertaken in this spirit. 9. The use of the term Republican to refer to democratic peace theory acknowledges current scholarly usage. It is questionable, however, in its implied reference to Kant, who as noted above drew a sharp distinction between democracy and a constitutional republic. Although Michael Doyle's (1983) interpretation of Kant's international thought provided the catalyst for the revival of interest in this aspect of liberalism, the explanations now offered for the democratic peace owe little to Kant. 10. Economic nationalists, starting from the premise that free trade consolidates the advantage of the commercially strong and impedes the development of the weaker party, argue for protection and other state initiatives to promote national development (Gilpin 1987, 180-183, 221-223). In general, liberal international relations scholars are far more ready than economists to accept imperfections in the liberal trading order. 11. The issues in this section are discussed by Zacher and Matthew under the heading "military liberalism" (1995, 126-129). 12. Viewed through other lenses, the image of a bifurcated world has been termed global apartheid. 13. If liberalism were identified with the superiority of markets to state regulation of the economy, it would be "a highly inappropriate label for my work"; unregulated markets are "biased against people disadvantaged by lack

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of marketable skills, mobility or sophistication" (Keohane 1989, 10,18). In his most extensive normative discussion he finds existing regimes "morally inadequate" for their failure to improve the condition of the worst off but argues that their abolition would probably make conditions even worse (1984, 247-257). 14. There is no survey comparable to those of empirical liberal theory, but for overviews of normative theory as a whole that bring out the extent of new developments since the early 1980s, see Hoffman (1985,1994). 15. Communitarian theory, by way of the idea of overlapping communities, can also lead to similar principles, even though this is seldom argued; however, Brown (1992a, 177-182) sees greater potential in communitarian thought. 16. For a thoroughgoing discussion of this position, albeit in the idiom of critical theory rather than liberalism, see Linklater (1998). 17. For a detailed rebuttal of these arguments in the course of a defense of economic and social rights, see Beetham (1995). 18. The term ideology is used here to refer to a system of beliefs that provides the immediate rationale for public policy. Ideological claims are simplified and value-laden. Theory refers to the formulation and justification of political values and to general propositions about the conditions of political life; it addresses issues and complexities on which ideology is silent. A theory may, but need not be related to an ideology. Neoliberal ideology is presented here in its simplest form; qualifications are introduced in Chapter 5. The summary is based on countless official statements and "authoritative" commentaries, above all in the financial media. 19. In this it is analogous to the ideology and cultural unification of the ruling elites of the Roman Empire, as discussed in Michael Mann (1986, 267272,310-317).

5 NEOLIBERALISM IN PRACTICE

The previous two chapters have traced the history of contending liberalisms, elitist and radical, locating today's ascendant neoliberal ideology toward the elitist end of the spectrum and noting the revival of radical liberal values in contemporary normative theory. The present chapter examines how the ruling ideology is being employed in the attempt to construct a neoliberal international order. From the standpoint of radical liberalism the most pressing world order concern is to address the needs of those hundreds of millions experiencing extreme deprivation, whose human rights are disregarded and whose basic subsistence needs are not met—a concern marginalized by neoliberalism. This chapter focuses on societies at the extremes of wealth and power: those of the affluent West and those supposedly developing but where mass deprivation persists and often even worsens. The discussion of the consequences of neoliberalism in these societies raises complex issues and is necessarily selective; for this reason the analysis does not extend to other kinds of society such as those of East Asia or the former communist countries. The chapter is divided into four sections. The first discusses the global context, in particular the claim that globalization rules out any alternative to the neoliberal agenda. The second examines the consequences of neoliberalism for Western societies in selected issue areas relating to the economy, the society, and the political culture, arguing inter alia that it intensifies self-absorption in the West, making for reluctance to address broader concerns of world order. The remaining two sections turn to those concerns, discussing the limitations of the

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neoliberal approach to economic development and the promotion of human rights and democracy. NEOLIBERALISM AND GLOBALIZATION It is tempting to see globalization as no more than a faddish buzzword or to claim it indicates nothing new, but there is now agreement among scholars in many disciplines that it points to a number of developments—some extending back for many decades—that, in combination, are indeed transforming contemporary societies, not just the economies but also culture in the broadest sense. According to a typical definition, globalization is "the intensification of economic, political, social and cultural relations across borders" (Holm and S0rensen 1995, 4), and these authors suggest this increasing interconnectedness is "leading toward a fundamental, qualitative shift in the conditions of people's lives' (1995, 5). German sociologist Ulrich Beck contrasts this multidimensional concept of globalization with the one-dimensional neoliberal concept, which he terms globalism (Globalismus), understood as the all-pervasive, all-transforming rule of the world market (1998, 195). Seen from this latter view globalization is a phenomenon of the past two decades; from the former it is the culmination of processes of change of much longer duration. The political implications are keenly debated. For some of those who see globalization as multidimensional change, it signifies above all a widening of horizons that enhances the potential for realizing the radical liberal values of the normative theorists discussed in Chapter 4. Indeed, Andrew Linklater (1998) envisages a "transformation of political community," meaning not the establishment of a world government but the growth of a sense of human community and a lessening of the sense of national identity. The latter in turn appears to be prompting a revival of local and ethnic identities—for some a positive development but for others a "fragmentation" that represents the problematic side of globalization. What is overlooked in these discussions is that globalization has quite a different meaning for neoliberalism—essentially Beck's globalism, the rule of the world market. In endorsing globalization the neoliberal elites seek to shape developments in a particular direction. They focus on the economic dimension: the transnational organization of production, the global mobility of capital, and the removal of all barriers to

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the construction of a world market. Neoliberalism seeks to accelerate these developments, at the same time claiming they are necessitated by globalization—indeed that it necessitates adoption of neoliberal measures throughout the economy and increasingly, as we shall see, throughout the society. Neoliberal doctrine thus drastically narrows the potentially vast array of opportunities that multidimensional globalization appears to open up. In a world of hypercompetitive economies the needs of the bottom third of the world's people become invisible and unmentionable, and the same pressures make for worldwide cultural homogenization and impoverishment. All that remains of the liberal vision are the abstractions of economics. Within the discipline of international relations relatively few have addressed these normative issues. The focus of interest has been the consequences of globalization for the entity usually taken to provide the discipline's raison d'être—the state. Do the present changes foreshadow the end of the modern states system, which came into being in the sixteenth and seventeenth centuries? A question of the longue durée, this cannot yet be answered. The processes by which the present states system came into being required centuries and were as multidimensional as the present globalizing tendencies (Ruggie 1993). The discipline's main concern is with more immediate questions: how globalization is affecting the sovereignty, autonomy, and capacities of states, both in relation to other kinds of actors and to impersonal economic forces, "the market" (Clark 1999, 34-51). In particular, there is extensive debate within international political economy over the extent states are constrained by the economic forces of globalization. This is a crucial issue for the present study, but there is a preliminary question: are the market forces or structural economic changes that are perceived to limit governmental choices truly apolitical—beyond the scope of governmental decisionmaking—or is neoliberal ideology integrally involved in promoting the developments it then invokes as rendering its policies unavoidable? It is convenient to approach these issues using an example that is highly significant for both international relations theory and neoliberalism: financial liberalization. The present system of free capital mobility was introduced through policy decisions in the early 1970s on the part of the U.S. government, supported by the U.K. (Helleiner 1994a and b).1 On the one hand, it is perceived as the main single constraint on national economies, a primary reason for the declining effectiveness of the state and for the perception of an absence of policy alternatives. On

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the other hand, financial liberalization, a core principle of neoliberal doctrine, is lauded as having "delivered huge benefits": A free capital market ensures that savings are directed to the most productive investments without regard for national boundaries. Capital can flow from capital-rich developed countries to opportunity-rich emerging economies. Increased competition has created a more efficient financial system, offering better opportunities for savers as well as lower costs for borrowers. Fancy new instruments such as derivatives . . . help firms to manage financial risk more effectively.

(Economist 1995, 4) The Economist concludes on an uncharacteristically cautious note: "The long-run result should be higher investment and growth." Apologists for financial liberalization assume that the world will act in accordance with the economics textbook; that gains will exceed the losses experienced in financial crises; that redistributive consequences will be offset by increased "growth"; that the risk of systemic breakdown ("meltdown") is under control; and that restricting governments' policy choices is in fact desirable because the markets impose a necessary discipline, ensuring financial virtue (Economist 1995, passim). It is not surprising that the Asian financial crisis of 1997-1998 prompted serious questioning of the benefits of unrestricted capital mobility. Similar questions arose after earlier financial crises, such as that over the European Monetary System in 1992-1993. Some leading international economists express reservations. Jagdish Bhagwati, for example, argues that a government "contemplating the embrace of free capital mobility" should take the risks very seriously and should not assume it will derive "the gains from economic efficiency . . . in a hypothetical crisis-free world" (Bhagwati 1998, 9). In contrast to the numerous studies of the benefits of free trade, Bhagwati sees the claims of advocates of free capital mobility as no more than "banner-waving." This can take surprising forms, as when the first of the "mammoth" benefits noted by one apologist was the ability to borrow abroad to finance the Reagan deficits—an ironic counterpart to the usual claims for financial discipline (Bhagwati 1998, 10). The powerful network in Washington pressing for unrestricted capital mobility, Bhagwati suggests, is "unable to look beyond the interest of Wall Street, which it equates with the good of the world" (1998, 12). Although they tend to be heeded only at times of crisis, substantial concerns over a system of unrestricted mobility have been expressed for

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some time (Helleiner 1996; Porter 1996). First, the case for the more efficient use of capital is on shaky ground when little of the vast volume of international money flows takes the form of direct or long-term investment, the greater part being currency speculation. Second, these speculative currency markets have a tendency to overshoot, generating dysfunctional currency instability, panics, and crises, to the detriment of the "real economy." Third, serious doubts are expressed over the efficacy of both international and national systems of prudential financial regulation, not only by outside analysts but also within the financial community (Strange 1999, 349). Finally, there is the broader issue of the loss of policy autonomy as mobile funds evade taxation and governments become preoccupied with reactions of the international money markets. Concerns along these lines provided one motivation for the European moves toward monetary union, but even so, Western governments have proved unwilling to reconsider the desirability of unrestricted capital mobility, even in the wake of such disturbances as those of 1997-1998. This may be due to the neoliberals' success in gaining credence for a second, seemingly more effective line of argument: financial liberalization, like globalization in general, is irreversible, "unstoppable." Money, like TV images, can move instantly around the globe. Governments cannot turn back the clock; they cannot reverse the advances of technology and in particular the coming of the information age. The argument, however, is surprisingly insubstantial. Why should the unrestricted movement of money be rendered unavoidable by the technological changes that have rendered its instant movement possible? The argument seeks to win support for an implausible claim by linking it to the general perception that broad-based technological changes cannot be reversed and also by exploiting the lack of public understanding of the intricacies of global finance. But even if globalization as a longterm, multidimensional process may be irreversible, particular policies are matters of choice. As we have seen, the present financial system was introduced through deliberate governmental decisions, and many governments still place restrictions on capital entry and/or withdrawal. It is true that technology renders it more difficult for governments to control movements of money, but in the last analysis the obstacles to a more regulated international financial system are political, not least the need for a high level of agreement if any system of controls is to be effective. 2 If arguments based on technological determinism are untenable,

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there is agreement among students of international political economy, nonetheless, that states are constrained in significant ways by global structural changes in production as well as finance (Cox 1994; Cerny 1996), and this remains the case where changes are induced by ideology. The debate is over the relative emphasis that should be placed on constraint or choice. The internationalizing of manufacturing and services renders governments especially sensitive to the preferences of transnational corporations, strengthening pressures to reduce levels of taxation, for example, or to deregulate labor markets. At the same time, the system of global financial deregulation creates imperatives for governments to maintain the confidence of the market, in the interests of their credit rating and the stability of the rate of exchange. Departures from financial orthodoxy—low inflation, balanced budgets—risk a loss of confidence. State capacities for economic management and for maintaining the welfare state are thus threatened by external pressures, but there are also significant internal constraints. Revenues are under threat from tax avoidance by corporations and the wealthy, and from high unemployment and the electoral backlash resulting from the disproportionate share of tax paid by middle-income earners. Meanwhile, the potential demands on government are increasing: supporting an aging population, expanding health services and tertiary education, unemployment relief, and increasing costs of law and order. And some long-established welfare institutions are unresponsive to new demands and resistant to reform. In these circumstances it is not difficult to see the attractions of the neoliberal agenda to many governments: in cutting back the public sector they can make a virtue of what can be presented as necessity. The response to these constraints is not predetermined, however, nor is it the case that "the 'competition state' has come to replace the welfare state" (Cerny 1993, 156). There is remarkable variation among the OECD countries in the size of the public sector, relative to GNP, and despite the decline in many welfare services, in most cases the core institutions and services enjoy sufficient electoral support to remain well established (Pierson 1996). Despite the global financial market there are significant differences in interest rates and in savings and investment as a share of GNP (Weiss 1997, 12). Corporation tax rates in the OECD countries varied, as recently as 1998, between 28 percent and 56 percent.3 Moreover, in the larger economies (the United States, Japan, and the EU as a single economy) trade remains a surprisingly small proportion of GNP, exports amounting to no more than 12 per-

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cent, and other indices of international economic involvement are similarly modest (Weiss 1997, 11). The size of the economy permits a good deal of policy autonomy. These data point to a distinction between the larger economies, constrained to only a limited extent by external pressures, and the majority of states, far more exposed to the vicissitudes of global economic forces. Yet even here it is reasonable to assume that states can preserve a certain freedom of maneuver through exercising financial prudence. A recent comprehensive analysis concluded that "globalization has not prompted a pervasive policy race to the neoliberal bottom among OECD countries, nor have governments that have persisted with interventionist policies invariably been hamstrung by damaging capital flight" (Garrett 1998, 823). The neoliberal agenda, then, is essentially a matter of choice, not structural necessity. The choices include the overall level of public spending (irrespective of the level, neoliberals invariably press to reduce it); the extent of privatization; the introduction of market mechanisms in the public sector; the principles governing welfare policy (minimalist, conditional, targeted, needs-oriented, inclusive, or favoring the better off); and the extent that education is regarded as a social investment or a cost to be borne by its beneficiaries. More generally, variations in national budgets reflect a wide range of choices by governmental elites. The pressure for homogenization cannot be attributed to structural imperatives but owes more to ideology that, like any ideology, promotes certain interests at the expense of others. These interests and the constellation of political forces supporting neoliberalism are examined in Chapter 6. Differences in policy choices reflect inter alia long-standing societal and institutional differences. The intensification of economic competition since the 1980s between the United States, Germany/Europe, and Japan/East Asia aroused increased interest in these differences, in particular in their distinctive capitalist "models" (the U.K. and U.S. models are usually grouped together as "Anglo-American capitalism"). The systems differ, for example, with respect to the economic role of government, corporate governance, the role of banks and the stock market in the financing of business, and the nature and extent of welfare provisions. The underlying philosophies range from free market to social market to what might be termed state-business partnership (Albert 1993; Hutton 1995, 257-284). The pressure for uniformity is experienced more strongly at this level than in relation to specific policy choices. Neoliberals have long

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contended that Europe cannot afford its expensive welfare state nor Japan its closely regulated economy; both should move toward the neoliberal norm. John Gray, while rejecting this thesis, acknowledges that the unregulated global market places these institutions under severe stress: In a global free market there is a variation on Gresham's Law: bad capitalism tends to drive out good. In any competition that is waged with the rules of global laissez-faire, that have been designed to reflect the American free market, the social market economies of Europe and Asia are at a systematic disadvantage . . . Both are threatened by the American model because each business bears social obligations that in the United States it has shed. (1998, 78-79)

Gray argues convincingly, however, that institutions so firmly embedded in the respective societies and cultures as those of German/ European and Japanese/Asian capitalism will not simply be transformed along Anglo-American lines. While significant change is necessary, this does not mean "emulating American practice" (1998, 78-99). Few close observers of these societies would disagree. The Asian financial crisis of 1997-1998 provided an impetus for these arguments and also an opportunity to bring strong financial pressure to bear in support of neoliberal demands. Apologists for this course of action applauded the conditions demanded by the IMF as signaling the triumph of the "Western" (actually American) model and the failure of its "Asian" counterpart (Mallaby 1998). Critics claimed that the IMF, under U.S. instigation, had failed in its task of relieving the immediate liquidity crisis, instead exceeding its proper role in seizing the opportunity to impose a range of "liberalizing" structural reforms (Feldstein 1998; Fukuyama 1998). What was heralded as a crisis for Asian capitalism, however, appeared to open up the possibility of a crisis for the Washington consensus as, in view of their uneven results, the universal appropriateness of its standard remedies came under challenge. A subsequent examination of regional reactions concluded that the crisis had seen "the emergence of a genuine contestation of policy ideas." Far from signaling the triumph of neoliberalism, it provided "a further spur to rethinking significant aspects of the neoliberal project" (Higgott and Phillips 2000, 359). Social liberalism's constraints are neoliberalism's opportunities, which its proponents have not been slow to exploit. It is now time to

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turn to the consequences of the neoliberal ascendancy during the past two decades.

NEOLIBERALISM AND WESTERN SOCIETIES The drive to implement neoliberal ideology is affecting all aspects of life in these societies. This section focuses on certain issues where its consequences are especially inimical to broader, inclusive liberal values. They include the inadequacy of the neoliberal response to the most serious current socioeconomic issue, structural unemployment; the debilitating effect on political culture of the perception that there is no alternative to neoliberalism; and the downgrading of public institutions and their characteristic values. Winners and Losers Before turning to these issue areas, we may briefly note the general pattern of advantage and disadvantage in the neoliberal decades. The decline in the rate of economic growth provides the context for these developments. The average annual rate of growth in gross domestic p r o d u c t in the O E C D countries was 4.9 p e r c e n t in the period 1960-1974 but declined to 1.6 percent in the decade 1974-1983; it improved to 2.8 percent in the next decade, 1984-1993, but not sufficiently to reduce unemployment (Bell 1997, 89). It remained at that level, but behind these averages there were major differences: in the 1990s U.S. growth was well above average, Japan's well below. Per capita growth was lower, and it is coming to be recognized that at modest levels of growth the increase in its perceived benefits, or "welfare," may be even more modest. Economists who have sought to measure increases in welfare arrive at rates of increase ranging from 0.5 percent to 1 percent below the annual increase in growth—a significant proportion when growth rates are low (Ormerod 1994, 31-32). 4 Decreased growth saw a marked increase in income inequality, reversing the pattern of the previous decades, which had seen a marginal shift toward a more equal distribution or at least, as in the United States, relatively even gains at all levels of income with a slight bias in favor of the middle (Krugman 1994, 131). In the United States in the 1980s, the lowest two quintiles experienced a decrease in income, and

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increases were spread unevenly, rising sharply at very high levels (1994, 132-138). A similar pattern is evident in other OECD countries. In Australia, for example, between 1975 and 1990 the share of the market income of the highest quintile increased from 34.2 percent to 37.3 percent—augmented by substantial "non-cash fringe benefits"—-while the share of the lowest quintile decreased from 8.2 percent to 5.9 percent (Bell 1997, 235)—a decline of 28 percent. The position of the lowest income group was sometimes improved by welfare payments, as in the Australian case, but the position of those not eligible for such payments deteriorated markedly. Again, the averages smooth over differences at the extremes: at one end the "feminization of poverty," in particular the presence of disproportionate numbers of single mothers in the lowest income group, and the new homelessness; at the other end the disproportionate increases in executive salaries, the burgeoning of the financial sector, the erosion of progressive taxation, and the prevalence of tax avoidance by the wealthy. The most striking aspect of the contemporary social polarization is the incidence of large-scale "structural" unemployment in most of the industrialized world. It is becoming widely recognized that official statistics substantially understate the magnitude of unemployment in that they normally do not include those in part-time employment who are seeking or would prefer full-time, nor those who have given up actively seeking employment and are no longer officially registered. In addition, a substantial amount of "self-employment" amounts to underemployment.5 Thus a substantial increment needs to be added to the official data to obtain a more adequate picture of the extent of the problem. Even so, the official data alone present a bleak picture. In the decade 1983-1993 the average rate of unemployment in the OECD countries was 8.4 percent. In 1993, a bad year, it was about 10 percent or higher in Australia, Canada, France, Germany, Italy, New Zealand, Spain (21.5 percent), and the U.K. In 1996 the position was somewhat better in Australia (8.6 percent), New Zealand (6.3 percent in 1995), and the U.K. (7.6 percent), but unemployment was even higher in Germany (11.5 percent or almost 4 million). In the United States it was a relatively low 5.4 percent (nonetheless, 7 million officially unemployed) and falling, and countries with previous very low rates, such as Japan, Norway and Switzerland, were edging up toward the U.S. rate (IMF 1997). In nearly all cases except Germany, the rate of youth unemployment was substantially above the overall rate, and although comparative data are not available, it was generally accepted that the

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proportion of long-term unemployed, with relatively low chances of returning to the workforce, was increasing. Except in the United States, improvement by the end of the decade was painfully slow. Structural

Unemployment

The human and social cost these developments impose on substantial sectors of the population—above all, the young and the long-term unemployed—is out of all proportion to the modest gains in "welfare" achieved by the majority, and those who have lost heavily far outnumber the big winners at the apex of the system. For many the loss of opportunity, self-esteem, and social relevance may count even more heavily than the material costs, and all of these contribute to the side effects of mass unemployment in exacerbating other social ills—the breakup of families, crime, violence, homelessness, and child poverty. Financial support for the unemployed requires a high proportion of public funds at the expense of other programs. Structural unemployment is caused by long-term economic changes, not merely a downturn in the business cycle. One such change is the decline in employment in old industries in the face of competition from low-wage economies. In principle this might be offset by employment in new export-oriented industries or in the expanding service sector, but in practice it is evident this is only partially the case. Many of those left jobless, like many new entrants into the market, do not find employment; they may be unskilled or have skills not easily transferable to other occupations. A more general reason affecting all sections of the economy is the acceleration of technological change; through enhancing "productivity" new technology reduces the demand for labor. Just as this formerly led to a massive shift of labor out of agriculture into industry and more recently from industry to services, there is now a major loss of employment in services where automation can replace personnel (the bank teller being the most familiar example). The tendency is enhanced by the phenomenon of "downsizing," whereby firms respond to competitive pressures and the demand for high returns— intensified by the mobility of capital—by reducing labor costs, creating further unemployment. The problems are exacerbated by regional variations in the incidence of unemployment; the contrast between the depressed state of the former manufacturing centers in northern England and increasing prosperity in the south offers a familiar example. Detailed study of the

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Australian case shows striking disparities in unemployment between areas, including suburban areas in large cities as well as extensive regions, according to their socioeconomic status. High-status areas enjoy full or near-full employment, while unemployment is heavily concentrated in low-status areas; such disparities change remarkably little over time (Gregory and Hunter 1996). The decline in the old manufacturing industries appears to have initiated this process: there were few new employment opportunities in the depressed areas, whose residents were either unable to move or they were unable to find work elsewhere. Neoliberal ideology may not be a major independent cause of structural unemployment, although it may exacerbate it through accelerating some of the processes of structural change. For example, rapid financial deregulation intensifies pressures for downsizing, and a policy that leaves declining industries to their fate removes the chance for depressed areas to buy time to initiate new developments. But the main consequence of the ideology is the way it restricts governmental responses to the problem: through oversimplification, grossly overstating the case for its preferred remedies, it excludes a range of relevant options. Neoliberalism sees two remedies for structural unemployment. The first is growth, provided it is achieved through the unrestricted market; rapid, sustained growth is deemed necessary to provide "real jobs." The role of government is limited to providing the right setting: low inflation, low interest rates, a balanced budget, lower rates of taxation. Part of this thesis is uncontroversial; without growth employment is unlikely to improve. But this cannot be the whole answer; the phenomenon of "jobless growth" has become all too familiar. Moreover, the correlation between rates of growth and employment is variable: the greater the gain in productivity, the less the gain in employment (Ormerod 1996). And as Krugman reminds his readers, the reason for variations in rates of growth remains "a mystery" (1994, 24). Whether the neoliberal formula will actually deliver sustained growth in a particular case remains uncertain. Not surprisingly, neoliberalism places greater emphasis on a second remedy—the flexible labor market—the need for which is constantly reiterated in the financial press. The claim is sometimes stated provocatively, as in an often-cited comment by the secretary of the Australian Treasury: "We know how to cure unemployment, but as a community choose to have high unemployment" (McGuinness 1998, 28). Commen-

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tator P. P. McGuinness had no doubt that this referred mainly to "downwards wage flexibility": The reality is that we could certainly reduce the rate of unemployment by several percentage points in the near future, but the combination of the vested interests and the moral and ideological preferences of those who already have jobs make this very difficult. The official economists know how to reduce unemployment; what they do not know is how to persuade people to bear the costs of doing so. (1998, 28)

Leaving aside the objection that it is not the community as a whole but its lower-paid workers who would bear the cost, the claim is not supported by common-sense logic nor by empirical studies of the labor market. Why should firms engaged in downsizing or replacing people by machines employ more people rather than enjoy increased profits? The demand for unskilled labor is generally observed to be declining, and there is no reason to suppose that if even lower wages could be paid, there would be a major increase in employment of the unskilled. In the economist's jargon, the demand for such labor is "inelastic." Other changes in the labor market may be more relevant; for example, where small firms are deterred from employing additional workers by high social charges or inflexible conditions, changes in these areas may marginally increase employment. The larger claims for flexibility, however, are entirely unconvincing. The more predictable effects are a reduction in security and a substantial loss of benefits for those in work. The example of the United States in the 1990s is regularly invoked in support of these claims, but the superior performance of the American economy in that decade is more plausibly attributed to a combination of favorable circumstances, not least its lead in the new technologies. A decade earlier, despite its flexible labor market, the U.S. economy appeared to be falling behind its competitors. Studies of the labor market suggest that downward wage flexibility would not radically reduce unemployment (Gregory 1996; Hutton 1995, 95-105). For example, in a comparison of the Australian and American labor markets between the 1970s and the mid-1990s, economist Bob Gregory found that the overall employment profile in the two countries was remarkably similar: both saw major increases in employment at the lower and higher earnings levels and decreases at middle levels. Moreover, employment in the United States increased at all income levels relative to Australia, not just where lower wages might have boosted U.S. employment. The main difference was the greater inequality in the

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American system: the income of those at the bottom was much lower, and real wages at the lower levels declined substantially during the two decades. Thus the social costs of the U.S. system are clear, but the reasons for its superior employment record must be sought elsewhere (Gregory 1996). More generally, the increase in part-time and casual work points to a notable increase in flexibility in all the OECD economies. While this reflects the preferences of some workers, many would prefer full-time employment. Thus the situation reflects the increased power of employers to impose their preferences. Still greater flexibility would increase employer power even further, but there is no reason to assume that increasing employment is high in employer priorities. The thesis that the community chooses its level of unemployment is open to a second interpretation, not in terms of a single factor but rather in terms of the total pattern of social arrangements. In comparisons between America and Europe it is often suggested that the Americans "choose" a high level of employment at the price of reduced living standards for low-wage earners, whereas the Europeans "choose" higher living standards and welfare benefits at the price of high unemployment. The cost of adjusting to technological and market changes is borne in the one case by the "working poor," in the other by the unemployed. The last point may be correct, but the suggestion that these outcomes are chosen by the relevant communities is misleading, in that they are the end-product of social and institutional choices extending over generations. Europeans are no more able to choose to adopt the U.S. socioeconomic system than Americans can choose the European. And even if they could, there is little reason to suppose it would solve the problem of unemployment. Indeed, for much of the postwar period many European states enjoyed higher rates of employment than the United States. It is surprising that the neoliberal simplifications continue to be reiterated by "official" economists and authoritative commentators. Accustomed to deriding the simple solutions offered by the uninitiated, they in turn offer their own simple but illusory solution. How it is possible that the discipline of economics should be misused to this extent and how this relates to neoliberal ideology are questions needing further examination, which is undertaken in the next chapter. The prevalence of this sort of thinking in policymaking circles, with its bias against governmental initiative, creates a climate of pessimism and defeatism that paralyzes constructive thought, and more-

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over one that shifts the onus of responsibility from those with the information and capability to act to those with neither. Yet there is by now considerable experience with governmental programs that can claim varying degrees of success in relation to particular categories of the unemployed, such as the young, the long-term unemployed, or those in depressed regions (Verhaar and Jansma 1992). These include training programs, subsidies and other incentives, reducing the working week, sectoral industry policies, funding of community services, and the like—some aimed at increasing aggregate employment, some at providing opportunities for those otherwise entirely excluded. Thought is also given to administrative styles, governmental interaction with community groups, and avoiding "welfare traps" (financial disincentives to work) without unduly depressing welfare payments. The premise is that there is no single solution but that serious governmental engagement with the issues can achieve improvement—a classical liberal reformist assumption denied by the neoliberal orthodoxy. The Denial of Alternatives The feeble response to unemployment is an instance of a wider phenomenon: the systematic exclusion of alternatives. This is not, it was argued above, necessitated by globalization; it is the perception of a lack of alternatives that is profoundly affecting the political culture of Western societies. The policy agendas that are vigorously promoted are no more than variations on a t h e m e — e s s e n t i a l l y the neoliberal Washington consensus referred to earlier. Social democracy and social liberalism are everywhere on the defensive, engaged in damage limitation but seemingly unable to offer a unifying vision, a sense of the way forward. 6 Nor do the ascendant neoliberals project a social vision. Their refrain—the appeals for restructuring, flexibility and competitiveness, further privatization, and tax reform—substitute an obsession with means and mechanisms for deliberation on social values. On the rare occasions where a doctrinaire neoliberal campaigns openly on this agenda, the outcome—or so the Australian election of March 1993 sugg e s t s — m a y be electoral defeat in circumstances that otherwise appeared to ensure victory. 7 More typically, electoral campaigning consists of fuzzy rhetoric, in relation to which electorates are becoming increasingly cynical. The loss of political vision is examined in the Australian context by

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James Walter (1996, 54-88), as the other side of the inability to perceive and frame alternatives and the consequent atrophying of political debate. It is not surprising that in such a political vacuum a widespread alienation from politics and politicians should develop—a perception that they form part of a remote elite, far removed from the concerns of those they supposedly represent. Democratic institutions may be beyond challenge, but they appear less and less consequential and more and more given over to empty ritual. In such a setting the growth of support for radical or populist movements of the right is also unsurprising. Though socially divisive and unable to forge feasible economic alternatives, they express the frustrations of those disadvantaged or cast aside by globalization and the policies uncritically endorsed by the political elite. The search for alternatives is taken up in Chapter 7, but at this stage it may be instructive to examine the case of Australia in the 1980s in more detail, since the policies to which there appeared to be no alternative amounted in the end to a rather selective version of neoliberalism. In the neoliberal view, as expressed by one of its leading publicists, journalist Paul Kelly (1992), globalization rendered it necessary to break completely with the traditional "Australian settlement"—White Australia, protection, wage arbitration, and state paternalism. Of these, only White Australia had been jettisoned earlier. In the 1980s the rest of the settlement was crushed by the neoliberal steamroller, but not so completely as has been assumed. The Australian Labor Party's nexus with the trade unions prevented the government from implementing the full doctrine of labor market deregulation; instead it opted for a hybrid system, which nonetheless proved vulnerable when a change of government brought about an intensification of neoliberal policies in this domain. The assault on the state was thoroughgoing in some respects, but in the case of welfare there was an attempt at reform rather than mere contraction. In the major area of health there was innovation and expansion; the new Medicare system of universal basic coverage became too popular to be easily reversed. It was only with respect to protection that the policy became doctrinaire. Financial deregulation and the removal of tariff barriers were embraced with a consistency and zeal that distinguished Australia from most of its OECD partners. It is likely that the policies of other governments identified with neoliberalism reveal a similar selectiveness. Thus in some degree alternatives were considered, and aspects of the settlement were retained—not, however, through open debate over

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the scope of so historic a change but through bargaining within the ALP and with its trade union allies. This was convenient for the government, but the price was high. The only "debate" was with those in the opposition parties and the media who, claiming that the reforms did not go far enough, ensured that the momentum would remain one-directional. The more fundamental issues remained unaddressed: to what extent could the values that underlay the settlement be retained in a new context? What were the terms of the new social contract? How could the adverse effects of globalization be mitigated, rather than accentuated through overzealousness? Should governments remain passive spectators of the decline of rural communities? More generally, how could government devise a policy mix that would take account of the nation's particular traditions, strengths, and weaknesses and not simply adopt the policy fashion at a time when its shortcomings were already becoming evident? That this more reflective approach was not taken and that no attempts to reformulate and update the distinctive Australian social contract were made—merely a few uncoordinated efforts to salvage fragments of it—can be seen as a consequence of both the intellectual climate and the immediate political constellation. The intellectual climate was influenced by the ascendancy of economic modes of thinking and the eclipse of historical thinking. The latter, with its sense of contingency and change and its capacity to locate the present as a moment in the society's long history, could have provided a corrective. Economic thinking, however, constructs a myth of the rational present correcting the errors of the past; in its current orthodoxy it is not creative but preoccupied with retrenchment. It is politically convenient, in such a context, to minimize the perception of choice and of whose interests are being downgraded, thus proclaiming the necessity of the chosen course—while at the same time claiming the new efficiencies will deliver abstract benefits in the future. The political context permitted the ascendant neoliberal forces to seize the opportunity presented to them by the strength of their position when governments experience pressure to contract. Controlling key positions in policymaking circles and in the bureaucracy, they could present governments with convenient solutions to their immediate problems, backed up by a plausible story. They were able to maintain the initiative, keeping political adversaries off balance and pressing an agenda that offered limitless scope for further privatization and deregulation. Starting with the "outsourcing" of ancillary services, this agenda

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was extended to privatizing even core governmental functions. While the former raises no fundamental issue, the latter, along with services directly affecting the public or holding confidential personal data, raises concerns over accountability that are widely perceived to be inadequately addressed. The Assault on Public

Institutions

The full scope of the neoliberal agenda becomes evident when it extends to remodeling public institutions along lines perceived as those of the private sector. In this process the culture of institutions such as the Australian public service or the universities in countries such as the U.K. and Australia is thoroughly transformed. In the case of the public service certain norms and incentives had long sustained a particular conception of the institution—an ethos in which the obligation to implement governmental policy was balanced by a norm of offering ministers independent advice, information, and if necessary, warning—the independence being assured by security of tenure. The rewards were subtle, but the ethos of service to the public underpinned a system in which relative security offset salary levels lower than for positions of comparable responsibility in the private sector. In the new competitive and supposedly more efficient "managerial" order, this ethos is replaced by mechanical financial incentives; rewards depend on measurable performance and results, and appointments are on limited-term contracts. Senior officials, however, are perceived as far more dependent on the government of the day, and the incentive and institutional memory required for tendering independent advice have been seriously diminished. The changes accentuate the short-term bias in a system in which governments look first and foremost to the next election. There is as little incentive to look to the longer term as there is institutional pride in what has been achieved: ambitious bureaucrats as well as ministers are motivated to take ostentatious initiatives such as structural changes in the short time available to them. Even more inappropriate has been the remodeling of universities in line with the presumed needs of industry and a hierarchical managerial conception that bears little resemblance to the actual concerns of industry or to current thinking on business organization. The process in the U.K. is perceptively reviewed by Desmond Ryan, who suggests that in view of the Thatcher government's disregard of the expressed views of industry as well as academia, its policies should be seen as driven solely

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by its ideology. Notwithstanding the extensive "deindustrialization" under way, priorities were to be shifted away from the pure sciences, humanities, and social sciences to applied sciences and technology. The needs of industry, as summed up by a director of British Petroleum, were quite different: Fundamental knowledge is needed for applied research in industry . . . without first-class basic research, industry's applied research would quickly decline in quality . . . Universities and industry needed to work closely together . . . we must ensure that universities can turn out top class scientists who do fundamental research. (Ryan 1998, 21).

The changes in the governance and culture of universities, which may be summed up as managerialism replacing collegiality, appear at one level to be driven by ideology—universities being reborn as businesses competing in a market—but they also express the covert side of the Thatcher revolution: the centralizing state's breaking down the power of independent institutions. Ryan emphasizes the latter: Behind the market rhetoric lay the political payoff: the reality of centralization, compulsion, and control. Within five years an apparently untouchable estate, formerly the source of ever-rising demands on the public purse, was reduced to a subordinate client system. (1998, 28)

The stronger U.K. universities may be able to withstand the anomalous conditions imposed by direct governmental control, but it is unlikely the Australian universities can maintain their standards under similar pressures. There is the same governmental preference for applied as against basic research, and there are pressures to observe officially defined "national priorities." While, as in the U.K., the government refrained from attempting full privatization, it encouraged the emergence of private universities and exerted financial pressure on universities to acquire any and every form of external funding. But it is the means used by governments to exercise their control that profoundly affect the character and working of the institutions. The former academic culture, in which respect for scholarly values provided a strong counterpoint to the rewards for entrepreneurship, embodied subtle incentives to elicit the best possible teaching and research. Rivalry and competitiveness were checked by open, collegial decisionmaking and the security and independence underpinned by the tenure system.8 The unhappy hybrid managed-market culture that has succeed-

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ed it substitutes crude quantitative "performance indicators" for reasoned judgment. Financial stringency is exploited to undermine the independence of staff along with security of tenure, where the latter is not assaulted frontally in the name of flexibility and competitiveness. There are financial incentives to seek extra funding for activities peripheral to the academic enterprise or to erode standards in the interest of increasing the number of students awarded degrees. In the name of efficiency staff workloads are increased beyond the level consistent with the highest standards of teaching and research, yet bureaucratic procedures are devised to demonstrate improvements in "quality." The eclipse of collegial decisionmaking opens the way to the arbitrariness to be expected of a closed hierarchy, while neoliberal economics provide a lingua franca in which these developments can be endlessly rationalized. Such practices are unsustainable, but in the meantime they can inflict serious cultural damage. Ironically, the managerialists invoke U.S. universities as the models to be emulated, disregarding their diversity and their commitment to the very academic traditions they themselves are demolishing. Implications

The neoliberal ascendancy is especially far advanced in the Englishspeaking democracies, but the same dynamics are present throughout the Western world. Utilizing positions of power in politics, bureaucracies, and the media, neoliberal elites maintain the initiative in pressing for "reform," "restructuring," or "modernization." They alone have a simple, all-purpose formula for cutting through the complexities of contemporary social choices. Two aspects of this process are especially significant for the construction of international order. First, as shown in the next section, the same constellation of power and ideology is reproduced internationally. Control of the institutions that provide or withhold finance enables neoliberal-minded officials to prescribe the same economic and institutional formula wherever countries depend on external financial support. Second, the unfolding neoliberal agenda intensifies the self-preoccupation of Western societies. The constant pressure for greater competitiveness and restructuring increases the sense of the insecurity of contemporary living, while the preoccupations of the elites do not extend much beyond the enhancement of "shareholder value" and the power games of corporations. At a time when by all accepted measures wealth

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in the Western world has reached unprecedented levels, there is little perception of this on the part of the people. 9 On the contrary, an ideology of constraint, the struggle to maintain a tolerable living standard, and the perception of inability to influence the course of events create a sense of being hard-pressed. There is nothing of the expansiveness, optimism, and generosity associated with earlier periods of liberal ascendancy.

DEVELOPMENT AND DEPRIVATION The problems of acute deprivation are altogether of a different order. Malnutrition, lack of education, lack of safe drinking water, and/or access to basic health services persist throughout the non-Western world but are especially concentrated in South Asia and sub-Saharan Africa. Only in East Asia has the pace of development been such as to reduce substantially the incidence of deprivation, and even here the financial crisis has placed these gains at risk in the largest country, Indonesia. Over time there has been a striking deterioration in the relative position of the deprived. The share of the poorest 20 percent of the world's population in global GNP declined from 2.3 percent in 19601970 to 1.3 percent in 1990; their share in world trade from 1.3 percent to 0.9 percent; and in savings and investment from 3.5 percent to 1 percent (UNDP 1993, 27). Since 1980 the poorest region, sub-Saharan Africa, has experienced an absolute decline in per capita income, which had grown at a moderate rate (3.2 percent per annum) between 1965 and 1973 but fell to 0.1 percent between 1973 and 1980, - 2 . 2 percent between 1980 and 1989, and - 0 . 4 percent in the 1990s (World Bank 1990, 11; UNDP 2000, 205).»° Dimensions of Deprivation As the international agencies are the first to acknowledge, the compilation of adequate statistics presents formidable problems, but a few examples can serve to indicate the magnitude of deprivation. In subSaharan Africa in the 1990s about 40 percent of the people did not have access to health services, 46 percent to safe water, and 52 percent to sanitation. Among the worst cases were Ethiopia (75 percent, 45 percent, and 81 percent, respectively) and Sierra Leone (66 percent, 64 percent, and 89 percent) (UNDP 1995: 159, UNDP 2000, 171). One

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third in this region, or 170 million, suffered from malnutrition. In South Asia 280 million lacked access to safe water and more than 800 million to basic sanitation; two thirds of adult women were illiterate and 48 million children not in primary school. Although average calorie intake was adequate, 300 million had insufficient food. In Latin America, with some of the most extreme income differentials, there were over 100,000 street children, and only 56 percent of the rural population had access to safe water (UNDP 1995, 26-28). UNICEF found in the early 1990s that 155 million children under the age of five in the developing world (excluding China), or 45 percent of the total, lived in acute poverty, and 14 million died each year (Falk 1995, 56). Although there have been major improvements in some aspects of the position of women, in particular in education, they have not made comparable gains in income in most of the developing world, where the feminization of poverty can have life-threatening consequences. More than 70 percent of the estimated 1.3 billion people living in poverty are female, and there has been a 50 percent increase in the number of rural women living in "absolute poverty" since the 1970s. There are nearly half a million maternal deaths annually, mostly in Asia and Africa. The disparity between men's and women's wages tends to be greater in the developing than in the industrialized countries, and their participation in senior positions much less. There is evidence that structural adjustment policies tend to disadvantage women. For example, in Mexico since the mid-1980s women's income declined in relation to men's, the wages of those employed in the new export industries strikingly so, as did their share of employment in the public sector. The contrasting example of Costa Rica showed that public policies could be devised to mitigate or even reverse these tendencies, but these appear to constitute exceptions to the norm (UNDP 1995, 36-40). Foreign aid during this period has done little to alleviate deprivation. Overall aid, which fluctuated around an average of 0.33 percent of the OECD countries' GNP between 1970 and 1992, declined in the 1990s to 0.22 percent of GNP in 1998 (OECD 2000, 14-15). It is often assumed that "aid fatigue," which has led to drastic reductions in U.S. aid, is a general phenomenon throughout the West, but this is not the case. Certain donors such as the Nordic countries maintain high levels, while others, starting from a low base in the early 1980s, increased their levels significantly before, in some cases, allowing them to decline.11 How great would be the cost of programs aimed directly at the alleviation of mass deprivation in the developing countries? In the early

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1990s UNICEF estimated that for a cost of $25 billion per annum over a ten-year period child malnutrition, preventable disease, and widespread illiteracy could be overcome, and for twice that amount adequate food, water, health care, and education could be made available for all; the UNDP has made similar estimates (Falk 1995, 57, 190; Thomas 1999, 244). No doubt the obstacles are more intractable even than the problems of political will and organizational capacity Falk identifies (1995, 192), but UNICEF can point to the success of specific programs that are able to mobilize extensive local support. More important, the order of magnitude of such estimates—comparable, for example, to European expenditure on cigarettes yearly or to the decline in OECD aid in the 1990s—makes it clear that the neglect of mass deprivation is not caused by absolute scarcity of material and financial resources but by the priorities of those in a position to mobilize such resources but who refrain from doing so. Theoretical

Perspectives

As recently as 1980 a high-profile international commission chaired by former West German Chancellor Willy Brandt put forward as its primary goal the abolition of hunger and malnutrition by the end of the twentieth century and advocated a major reallocation of resources and refocusing of priorities to this end (Brandt 1980, 271). It is characteristic of the neoliberal ascendancy that while such ambitions are occasionally voiced by heads of government, there is no reference to the question of resources: this is not part of the discourse. The relief of poverty, as it is euphemistically termed, is viewed as an issue for the longer term. In the language of strategic studies, it is no more than declaratory policy. The normative issues raised by this acquiescence in absolute deprivation are discussed in relation to human rights, below and in Chapter 4. 12 The focus of the present section is how the neoliberal Washington consensus has narrowed the development agenda, silencing such concerns. "Development" is a highly contested concept. The values it embodies are challenged by some radical critics (Sachs 1992; Escobar 1992), but the present discussion accepts the desirability of "human development" as defined by the UN Development Programme: "both the process of widening people's choices and the level of their achieved well-being" (UNDP 1990, 10). In practice, the international development agenda since World War II has been concerned with the economic

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development of the then nonindustrialized world. It is evident the record has been extremely uneven. Very few countries, mainly in East Asia, have experienced sustained growth such as to achieve or even approach Western levels of development. Elsewhere, economic development has been slow as in South Asia, or interrupted by serious setbacks as in Latin America or by prolonged setbacks as in sub-Saharan Africa. There have been many schools of thought on development, some highlighting the broader social or international context, such as modernization or dependency theories, with others such as neoclassical economic theory focusing solely on the economic domain. For the latter, development raises no special issues for economic theory or for policy, whereas for the "development economists" whose views were influential in the early postwar decades, the social and institutional problems of development called for new theorizing and policy thinking (Kahler 1990, 31-44; Adelman and Morris 1997, 831-832). At the policy level there have been major differences over the role of the state versus the market, agriculture versus industry, and import substitution versus export orientation. These differences have often been polarized in ways that oversimplify the vast problems associated with modernizing and developing the heterogeneous societies of the non-Western world, all ostensibly committed to development but some embracing the development ethic with enthusiasm and others viewing it with serious reservations. An awareness of the magnitude and unevenness of the development experience of the West during the past two centuries, and of the political and social upheaval experienced by the few successful "new industrializing countries" (NICs) of the present, would seem to be a prerequisite for policy recommendations on development; yet this has not been considered necessary at a time when policy thinking is dominated by neoclassical economics. A broad historical understanding of development, however, underpins two recent overviews (Leys 1996; Adelman and Morris 1997). The latter emphasize the need to take account of the particular features of each society and the value of distinguishing different phases and paths to development. In line with this approach, a widely cited study by Stephan Haggard (1990) identifies certain conditions that facilitated rapid development in the NICs: a favorable combination of external pressures and incentives; a favorable political constellation including a weak rural elite; a state with strong capabilities, relatively insulated from economically power-

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ful interests; and technical policy competence. It is evident such a combination of preconditions is not widely replicated. But the main significance of Haggard's analysis is that it highlights broader political and international preconditions, along with the central role of the state. Colin Leys, building on such studies and placing even greater weight on the overall structure of economic and political power, questions whether development can be revived in a world of unregulated capital (1996, 56). Against this kind of background, one-dimensional economic theories and policy recommendations that neglect the particular and also the question of political prerequisites appear woefully inadequate, whether these are the orthodox universal prescriptions of the Washington consensus or the views of dissenting economists such as Jeffrey Sachs, who offers a different one-dimensional analysis. Sachs ascribes the failure of most African countries to achieve economic growth mainly to lack of economic openness and market incentives and a low savings rate. His remedies amount to variations on the neoclassical theme: remove tariff protection and subsidies and introduce simplified and lower taxes; he was ahead of orthodox opinion in calling for "deep debt-reduction," conditional on "far-reaching domestic reforms" (1996, 23). The neglect of particularities and political conditions is as striking as the confidence that a universal economic formula imposed from outside can generate a process of political, social, and cultural as well as economic change; the economic levers are assumed to move the whole. Structural Adjustment Viewed in this context, the disappointing experience of two decades of structural adjustment, the development orthodoxy since the early 1980s, is not at all surprising. While there is room for debate over the degree of success of particular adjustment policies, there is no denying that the countries most dependent on the assistance and policies of the international financial institutions have, with few exceptions, experienced a decline in already depressed living standards. The countries with established export industries were able to take advantage of the relatively open markets in the OECD countries, and it was these same countries, mainly in Latin America and East Asia, that received most of the foreign capital looking for investment opportunities in the developing world. Countries with traditional primary exports, on the other hand, experienced deteriorating terms of trade, especially those that, on the

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advice of the international financial institutions, expanded their production of export crops, which led to declining world prices (Ravenhill 1993, 76). These mainly poorer countries could attract little foreign investment but were locked into debt repayments at high interest rates, the legacy of the recycled petro-dollars available cheaply in the 1970s. The turn to structural adjustment in the 1980s as the specific task of the World Bank—replacing the concern for poverty relief and basic needs it had highlighted under Robert McNamara in the 1970s—can be seen as a response to several developments. The immediate catalyst was the severe balance-of-payment problems experienced by many developing countries as a consequence of the new increases in oil prices and the burden of debt repayment, which were seen to require more than temporary stabilization measures (Stern 1991). Restructuring, an open-ended term, included measures to increase a country's export capacity and also to improve the efficiency of the use of resources and the capacity to attract foreign capital. What was needed to achieve these goals was perceived through the lenses of the Washington consensus: the rolling back of state intervention in the economy, promotion of market mechanisms, "getting the prices right," trade liberalization, financial liberalization, and privatization (Taylor 1997; Pieper and Taylor 1998, 45^16). This agenda was influenced by how economic policymakers read recent development experience. Radical structuralist thinking had not delivered steady development in Latin America; inefficiencies due to the abuse of governmental power and "rent-seeking" on a grand scale could be readily identified in that continent, as in Africa. And whereas inward-looking, import-substituting industrialization had led to rigidities and stagnation, the export-oriented development strategy adopted in East Asia was delivering spectacular rates of growth (Kahler 1990). The promotion of export-oriented development became a centerpiece of the new approach. It was assumed, quite mistakenly, that East Asian development exemplified the minimal role of the state, the free play of the market. 13 The new orthodoxy also undoubtedly owed a good deal to the powerful ideological impetus that the Reagan administration brought to U.S. policy. Oversimplification was encouraged by Reagan's extolling of "the magic of the marketplace" and his administration's outright rejection of the 1970s North-South agenda (Tickner 1990, 5 6 - 5 8 ; Feinberg 1983). The administration's four-point plan for development—to reduce tariffs and barriers to foreign investment, enhance the role of markets, limit that of the state, and help countries that helped themselves—placed the responsibility on the developing country, tacitly

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disclaiming any obligation on the part of the "North." This powerful support for neoliberal doctrine set the parameters within which structural adjustment lending sought to overcome developmental problems. One of the earliest and most persistent lines of criticism of the adjustment programs was that, like IMF stabilization programs, in the pursuit of economic efficiency they neglected social costs, in particular the effects on the poor of cuts in public expenditure and the increased recourse to market mechanisms (Cornia, Jolly, and Stewart 1987; Stewart 1995). Some adverse effects were well established and indeed acknowledged within the World Bank (Zuckerman 1991), but the measures through which it addressed them remained marginal (Stewart 1995, 133-134, 166-167). A second major concern was the extent to which the adjustment programs fell short of achieving their goals (Thomas et al. 1991; Lipton 1990; Stewart 1991). Some states were able to benefit, others not, and it was often debatable how much a successful outcome owed to the policy (Pieper and Taylor 1998). Failure could be attributed to specific factors: resistance by well-placed interests, lack of governmental commitment or capacity, or an unfavorable socioeconomic context. But a pattern of failure suggested that the policy approach was inadequate. The obstacles to development proved to be more intractable, and more interrelated than had been assumed. In effect, many of the factors that had impeded earlier strategies also limited the effectiveness of structural adjustment. Thus, like the neoliberal approach to unemployment, structural adjustment offered an illusory "solution" that distracted attention from more fundamental problems. These may vary from case to case, but Frances Stewart offers a plausible checklist of major elements of a strategy aimed at moving the most disadvantaged region, sub-Saharan Africa, to a pattern of "sustainable economic growth combined with social justice": "agrarian-focused strategy; support for rural non-agricultural production; industrial development; regional import substitution; diversification of exports; and development of human capabilities" (1991, 415). Adjustment policies work against some of these and provide only limited support in others. The point is not to endorse any particular strategy but to underline the orthodoxy's neglect of the more fundamental and long-term issues.14 As late as 1994 the Bank was still reaffirming its strategy. In a major review, "Adjustment in Africa: Reforms, Results and the Way Ahead," it claimed significant success in market liberalization and privatization (Adam 1995, 731), concluding with a ringing endorsement of the need for further adjustment, but the

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report offered little to suggest that the improved growth measured in certain cases was sustainable. It played down declining investment and excluded "non-quantitative factors" such as antiagricultural bias, quality of infrastructure, and ideology and governance (1995, 732-734). At the end of the decade the Bank's rhetoric has been transformed. Little is now heard of structural adjustment, and the new "comprehensive development framework"—with its reference to multiple goals, the interdependence of problems and policies and the need to learn from the variability of earlier policy outcomes—signals a new pragmatism and eclecticism (World Bank 1999). It appears to have moved closer to the first of the two theoretical perspectives noted above, though with a limited historical framework. But three major caveats are in order. First, although the Washington consensus has been strained by the East Asian and Russian financial crises, it has not been disowned; its elements remain the core policies of the international financial institutions. There is no fundamental reform of the international financial system. The general benefits of financial liberalization and privatization remain unquestioned, even though particular exceptions may be tolerated.15 The World Bank's promotion of privatization as the solution to the developing world's increasing scarcity of water, for example, reaffirms neoliberal orthodoxy on an issue where the needs of the most disadvantaged are at stake, even though market incentives to meet those needs are manifestly absent.16 Second, the goal of reducing poverty has moved only a short distance from the aspirational to the practical. In the 1980s it was made clear the emphasis was on adjustment, not "longer-run issues associated with reducing structural poverty" (Thomas et al. 1991, 272). The 1990 World Development Report, devoted to poverty, did not formulate a strategy but posed a question: "what might be achieved if governments in rich and poor countries alike made it their goal to attack poverty in the closing decade of the twentieth century?" (World Bank 1990; 1; emphasis added). The report's projections assumed that existing trends and policies would continue; there would be major reductions in poverty in Asia, but it would require "exceptionally bold action" to avoid an increase in Africa (1990, 5, 143). There was no suggestion that the Bank might seek to mobilize support for such action. By the mid-1990s there was indeed a significant increase in lending for "investment in people" (health, education, nutrition, and family planning), reaching 17 percent of the Bank's total lending in 1994 (Shihata 1995, 48), and poverty reduction was proclaimed as its foremost objective.17 But there

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was still no overall strategy, agreed-on priorities, or time frame that would render this an operational goal, as one long-standing Bank official acknowledged (De Vries 1996, 75-78). A 1997 report expressed the hope that "over the long term, rapid growth and investment in people will cut poverty dramatically" (World Bank 1997, 54). At the end of the decade the goal is formulated more precisely: by 2015 "extreme poverty" is to be reduced by 50 percent, and there is to be universal primary education and access to reproductive health services (World Bank 1999, 20). But it is admitted that existing trends are adverse (1999, 25), and in the absence of discussion of an operational strategy or the issue of reduced aid funding, the goals appear more aspirational than ever. This points to the third caveat, namely, the declining resources available for development. The present level of aid renders meaningless the resounding declarations of the G-7 governments against poverty, hunger, and illiteracy. While the market offers minimal incentive to invest in poorer countries, there is no effective, publicly funded alternative to the neoliberal development model. At best, the World Bank's new social concern may soften its polarizing effects. In this context the role of the international financial institutions amounts to little more than sustaining an illusion—that the needs of the most disadvantaged billion-plus are being addressed, when in fact they are being bypassed. The Turn to Governance

The doctrine of the international financial institutions, and the World Bank in particular, has been modified in one important respect, namely, concerning the role of the state in development. The question is whether this requires a reappraisal of the foregoing conclusions. Since the late 1980s the Bank has paid increasing attention to questions of "governance," especially in Africa (Williams and Young 1994), and its report on The East Asian Miracle (1993) went some way to accepting the view that the state had played a central role in promoting the exceptionally rapid industrialization and development in Northeast Asia in the preceding decades, though not far enough to satisfy many students of the region. This reappraisal of the state's developmental role culminated in the Bank's 1997 World Development Report. Rejecting the minimalist state, the report insisted that successful development, past and present, has required an effective state as catalyst and facilitator. The report highlights two themes. The first, proceeding from the view that most if not all contemporary states are overextended, is the

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need to focus on "matching role to capability": on securing the basic social as well as economic fundamentals and withdrawing from those activities that can be better carried out in the private sector. Second is the need to "reinvigorate" or in many cases build up effective public institutions, in order to establish such basic prerequisites and a predictable policy environment. Much of the report reads as a manual for governmental reform, at times lapsing into the aspirational: "An active civil society and a competent and professional bureaucracy are twin pillars of a constructive relationship between state and society. When comprehensive collapse of the state is a danger, these twin pillars may reduce the risk" (1997, 160). Not surprisingly, it remains an economist's view of the state, and the neoliberal view on economic issues remains unquestioned. Perhaps for these reasons, the report fails to draw out the implications suggested by its analysis. While it acknowledges that state initiative played "a vital catalytic role in the development of markets in Europe, Japan and North America" (1997, 21), its only examples of this role are American. It does not allow for the possibility that the state may frequently have been the crucial actor in initiating the development process. Its equation of development with the growth of markets conveys no sense of the multidimensional character of the process, nor is there a hint that through the greater part of their history most of these states violated the Washington consensus formula. This lack of historical awareness is well brought out in Adam Przeworski's comment on the neoliberal development strategy: The strategy appears to be without precedent in history. All previous attempts at modernization conceived of development as a project linked to national, economic and political independence. All previous modernizing leaders asserted the importance of national cultures, called for political institutions consistent with national traditions, and envisaged growth led by national industries and oriented towards local markets. In contrast, the strategy of modernization by internationalization explicitly accepts at least a partial surrender of national sovereignty in the political, economic, and cultural realms. (1992, 55)

In effect, the development strategy so confidently propounded for two decades amounted to a gigantic gamble—one that, historical experience suggests, had little chance of success. The implications of the new interest in governance are most farreaching in Africa, where the involvement of the World Bank has

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extended beyond encouraging administrative reforms, which can be presented as technical and apolitical, to the promotion of developments within the society that, if effective, would amount to "the construction of a liberal public sphere" (Williams and Young 1994, 88). Stopping short of the explicit promotion of democracy, the Bank encourages the development of the characteristic institutions of "civil society"—participation in NGOs, occupational and professional associations, and the like—modern forms of association that cut across traditional ethnic and communal groupings. While the Bank cannot act directly in this sphere, it can encourage Western NGOs to assist in the formation and growth of indigenous NGOs. The underlying idea may be, as one author associated with the Bank has suggested, that "as long as the economy of affection is able to influence behavior in the public realm . . . governments in Africa are likely to remain paralyzed . . . to that extent it is clear that improvements in government performance are dependent on the transformation of society" (Goran Hyden, quoted in Williams and Young 1994, 96), and a senior Bank official has referred to "the long-term process of changing mentalities" (1994, 97). But whereas intervention in situations of acute conflict ("humanitarian intervention") is vigorously debated, both internationally and in the intervening country, the issues raised by social and cultural intervention of this kind do not appear to be a matter of concern to the Bank and like-minded Western NGOs, nor for that matter to the Bank's many critics. Yet this far-reaching attempt, backed by financial power, to shape the structures and values of other societies raises issues no less important for liberalism than more overt forms of intervention. What has been questioned, however, is whether these initiatives and the introduction of democratic elections will have the positive effect on economic development that the governance thesis assumes. Arguably, the crucial prerequisite is to establish appropriate governmental institutions, and it is widely noted that the earlier phase of development has often been undertaken successfully by authoritarian governments (Jeffries 1993). But this once-familiar line of thought is silenced in the present political climate. The scope and intrusiveness of intervention by the international financial institutions did indeed become a subject of controversy in the East Asian financial crisis in 1997-1998, when the IMF's requirements went far beyond measures normally required for correcting a current account imbalance, extending to a demand for far-reaching institutional changes. In the case of Indonesia, so recently celebrated for the success

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of its broad-based development strategy, these had major political implications. According to one commentator, Indonesia's agreement with the IMF "renders obsolete notions of national sovereignty": It is not just a rescue. It is an application of sound public policy to a Javanese Kingdom that will also destroy the Suharto family privileges . . . It represents a financial and political philosophy of market-oriented liberal democracy which, in the Indonesian context, is reformist and some might call revolutionary. It reveals the IMF as the spearhead for a new society backed by Washington and US strategic interests. (P. Kelly 1998)

It now appears unlikely this will serve as a model for the future; a dominant theme in the debate over the future role of the IMF is that it should focus its efforts on its core functions. The turn to governance amounts to only a limited revision of 1980s neoliberalism. The essential role accorded to the state is to provide the prerequisites for the market economy. It is denied, in principle, the kind of direction of the economy that was exercised by successful developing countries in the past, and in practice its dependence on the international financial institutions ensures that their pressures to liberalize and privatize will be heeded. It is true that provision of basic health and education is now included in the Bank's view of the core functions of the state, along with those endorsed by Adam Smith: defense and the security of persons and property rights (World Bank 1997, 20, 27). In practice, however, these do not have priority in the conditionality of financial assistance, and there is no commitment to the relief of absolute deprivation. There is something of the rhetoric of social liberalism, but thanks to the G-7 governments, it is backed by resources that are manifestly inadequate to the scale of the problems. The earlier conclusions stand: the international financial institutions, although in the last analysis the agents of those governments, remain the quintessential symbols of liberalizing globalization from above.

HUMAN RIGHTS AND DEMOCRACY As we have seen, the promotion of human rights and democracy provides the idealistic counterpart to the neoliberal ordering of the international economy—the key legitimizing ideas for the projected international order. Both ideas are "essentially contested"—focal points for

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debates over values, not concepts whose meaning is fixed and accepted. This section will examine current Western concepts of human rights and democracy and their relationship to neoliberalism. It will be argued that whereas certain other concepts of human rights and democracy have the potential to challenge the legitimacy of a neoliberal order, Western concepts are construed in the official discourse in ways that serve to legitimize it. The Question of Economic and Social Rights Political theorists, as we saw in Chapter 4, for the most part find the conventional, legally convenient distinction between civil and political rights on one hand, and economic, social, and cultural rights on the other, unfruitful as a basis for clarifying the philosophical and normative issues raised by human rights claims. It was argued that a core issue dividing neoliberalism from social liberalism was the denial by the former of the validity of social and economic rights, whereas for the latter certain of these, in particular subsistence rights, should be included among the most basic of human entitlements. With qualifications noted below, the present Western governmental view of rights is neoliberal, that is to say, it excludes the economic, social, and cultural rights that equally form part of the Universal Declaration of Human Rights adopted by the UN General Assembly in 1948. This asymmetry is reproduced in the UN's machinery for monitoring human rights, which is well developed in the case of civil and political rights but rudimentary in the case of economic, social, and cultural rights (Farer and Gaer 1993, 253-269). This narrowing of the concept of rights perpetuates the sterile Cold War debate that pitted Western proponents of civil and political rights against Soviet-bloc adherents of economic and social rights and that continues to divide Western and non-Western governments. In some respects the term Western is a misnomer: all the Western countries except the United States have signed the International Covenant on Economic, Social, and Cultural Rights as well as that on Civil and Political Rights. 18 But this amounts to no more than lip service to social-liberal values. In practice neither their diplomacy nor their aid policies acknowledge economic and social rights or, more specifically, a right to subsistence. 19 The United States is more consistent; its policy is classical liberal in principle as well as in practice. The normative inadequacy of this version of liberal values in the contemporary global context has been argued earli-

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er. For this reason, as well as for the bleakness of the prospect it holds out for the majority of peoples, it is likely to prove inadequate as a legitimizing principle for international order. Human Rights

Diplomacy

The human rights diplomacy of Western governments is subject to further, more familiar limitations. Throughout the Cold War, with the partial exceptions of the Carter administration, it was subject to the constraints of realism, that is to say, highly selective and condemnatory of the communist states but making little of human rights violations in states aligned with the West. Subsequent inconsistencies are less flagrant, but most states are slow to condemn governments with which they enjoy mutually beneficial relationships, and criticisms of double standards abound. In general, human rights diplomacy is compartmentalized; business proceeds as usual. Governments occasionally express more or less openly the underlying premise, not so much neoliberal as realist, that idealism should not be allowed to disrupt profitable economic relations. Alternatively, there is the claim that improvements in human rights are best promoted through economic development: "the most important thing that Australia and Australians can do for human rights in Northeast Asia is to promote systemic change through consistent support, as a reliable economic partner, for internationally oriented economic reform policies" (Garnaut 1989, 136). Not surprisingly, this claim is debated on several grounds: its equation of idealism with selfinterest; the confidence of its prediction; and its postponement of human rights improvement to the possibly distant future. The case of China brings out the tensions within Western human rights diplomacy. Before 1989, when China was seen as a counterweight to the Soviet Union, concerns over human rights were muted. The shock of Tiananmen Square led to their becoming a focus of attention and to the imposition of economic sanctions. These were quite limited, however, except for the threat of a far more serious sanction, the withdrawal by the United States of most-favored-nation trading rights, which was debated each year by Congress until 1996, when the Clinton administration succeeded in ending the practice of annual review. This was widely perceived as a victory for business interests over human rights concerns. Had economic and social rights been given greater weight in Western thinking, however, the appropriateness of so drastic a

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sanction must have been questioned from the outset. But this in turn would have sharpened the question whether, and how, human rights diplomacy can be effective. A possible answer is that in the short run it is seldom effective, but in the long run the relatively gentle but steady pressures of bilateral and multilateral diplomacy can promote change, as in the former Soviet Union and Eastern Europe. From this point of view the diplomacy can be regarded as a source for the constant reaffirmation of classical liberal norms in the contemporary international order—a practice that places a certain pressure on many non-Western governments but none at all on the West. This points to a systemic function of human rights diplomacy. Even though the classical liberal rights alone are an insufficient normative basis for international order, they may well be an essential element in any acceptable order at the present time. They enjoy significant support in most societies, even where they cannot be openly expressed, and are endorsed in very specific terms in the relevant United Nations instruments. In setting the normative agenda in terms of these values, Western governments can claim the moral high ground, challenging the moral standing of governments whose human rights record is questioned.20 A strong assertion of social and economic rights, on the other hand, and especially subsistence rights, would pressure Western governments, as the representatives of the affluent world, to address the most urgent human needs. It is true there would also be pressure on some nonWestern governments, whose commitment to economic and social rights may be no more than rhetorical, but it is evident that in many countries the resources for addressing subsistence rights are inadequate, whereas they could be made available by the West if only a small fraction of annual economic growth were reallocated to that end. The asymmetrical human rights doctrine of the Western states thus serves as a shield for the neoliberal order. It offers a legitimizing principle that does indeed serve some important human values but denies others—not only the economic rights of the deprived but the egalitarian values that were present in the liberal tradition from the outset. Democratization

Despite its current vogue, the promotion of democracy does not reflect the same degree of international consensus (however ambiguous) as human rights, nor does it raise such fundamental normative issues. The

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present third wave of democratization, as Samuel P. Huntington (1991) termed it, has coincided with the collapse of European communism and the discrediting of other authoritarian regimes for their gross abuses of power and/or their failure to achieve significant development. At a time when the governments of most of the strongest and wealthiest states derive their legitimacy from popular election, it is increasingly difficult to maintain support for other legitimizing principles. Even so, it would not be surprising if there should be a reaction, as in the earlier cases. First, as we have seen, the obstacles to successful development in the more disadvantaged countries are formidable, and the policies they are constrained to follow offer little hope of overcoming them. The East Asian experience lends some support to the view that the crucial earlier stages of development may be most easily achieved under a certain kind of authoritarian regime. This qualification is essential, as most authoritarian regimes have lacked the necessary priorities and self-discipline or, as in Suharto's Indonesia, have failed to sustain them. Second, in many societies democratically elected governments may have difficulty maintaining order, especially but not only where there are deep ethnic divisions. Weakly integrated states and societies confront many pressures. Before the present wave of enthusiasm for democracy, political scientists tended to highlight the difficulty in achieving the social and cultural prerequisites for stable democratic rule. In any given case, the legitimacy of government may be grounded in religious or cultural traditions, not popular election, especially if elected governments are equated with alien cultural influences or perceived as ineffective or corrupt. There are thus good reasons for liberals to exercise caution in pressing the case for democratization. Arguably, nonetheless, democratic elections offer a better chance than other legitimizing principles that governments will be placed under pressure to address the needs and interests of their peoples. Whatever their shortcomings, democracies have not committed the kinds of atrocities against their own people that were perpetrated by the worst totalitarian regimes. The case that even minimalist democracy can avert the most flagrant political crimes is persuasive. The problem with authoritarian regimes is that relatively few of them, historically, have been committed to Locke's principle that government is a trustee, ruling in the interests of the people; rather, they serve the interests of the regime and a section of the society, usually a narrow one. Democracy and also development as legitimizing principles serve as a diffuse pressure on governments to act more as Lockean trustees and less as predators.

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From this point of view there is some virtue in the inconsistencies in the promotion of democracy that has been so prominent in U.S. foreign policy rhetoric since the Cold War, even though the reasons may have been self-interested. The United States has supported the consolidation of democracy in regions such as Eastern Europe and Latin America, where new democratic regimes came to power with substantial popular support, but has played down the issue where economic or security interests pointed to working with nondemocratic governments, as in East Asia and the Middle East. Only in Africa was promoting democracy, in the absence of prior internal movement in this direction, a major element in U.S. policy, and even here, in practice little was done in the face of strongly entrenched dictatorships (Carothers 1995). The claim that "democratic enlargement" can be seen as the "Clinton doctrine" is not convincing, if this is taken to mean an operational strategy, as distinct from a general reaffirmation of the Wilsonian tradition (Brinkley 1997). The pressures in favor of democratization are relatively light; more direct and persistent are the pressures for trade liberalization. Some officials tend to merge the two: "In the Cold War the concept was containment; now it's to enlarge the scope of democracy. It's all about widening market access" (Brinkley 1997, 127). Democracy and markets are seen as mutually supportive; but where trade-offs are recognized, there is no inclination to press for democratization. Schumpeteridn

Democracy

The prevailing conception, and that recommended to the non-Western world, is the limited one formulated by Joseph Schumpeter (1943) in opposition to the classical conception that highlighted the rational choices of well-informed citizens—a conception that appeared to have been discredited by studies showing that the level of political information, attentiveness, and participation in modern electorates was alarmingly low in terms of the classical conception. According to Schumpeter, whose view "is now almost universally accepted by scholars working on this subject" (Huntington 1993, 28), the essential feature of modern democracy is the choice of government through competitive elections, in other words, through competition between rival political elites. Genuine competition requires certain basic political rights—a reasonable degree of freedom of expression and association. But it does not assure "many other things which people often associate with democracy, such as justice, equity, responsiveness, stability, honesty"

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(Huntington 1993, 28-29). And it is compatible with illiberal rule, where citizens are subject to arbitrary action by the elected government (Zakaria 1997), majorities oppress minorities, or political competition is confined to an oligarchy that maintains its privileged position in a hierarchical society. As one Korean scholar has written, "under Schumpeterian democracy, democracy can co-exist with socio-economic injustice, deprivation and inequality" (Im 1996, 291). It is ironic that at a time when Western diplomacy is promoting democracy so uncritically, there is increasing alienation f r o m Schumpeterian democracy—or "thin democracy," as it is termed by Benjamin Barber (1984)—in the West itself. One reason, noted earlier, is the perception of a lack of alternatives, a perception that whatever voters may prefer, governments will pursue a neoliberal agenda (what the French call la penseé unique). Moreover, if the voter is thus rendered ineffectual, governments themselves appear increasingly ineffective in relation to the principal concerns of the day, indeed increasingly remote from everyday concerns. In such a climate politicians, and politics as a sphere of activity, enjoy low esteem. Calls for more active citizen participation—Barber's "strong democracy"—fall on stony ground as citizens cultivate private rather than community interests. Populist movements expressing illiberal views can arouse genuine passion, both for and against, but although they do not appear to threaten the survival of minimal democratic institutions, their prominence is a symptom of an illness in the liberal-democratic body politic. It is not surprising that Schumpeterian democracy should experience such a malaise. A conception of democracy that excludes participation as a political value is paradoxical if not self-contradictory. Arguably, it is only in the neoliberal era that Western democracies have come to conform at all closely to the Schumpterian ideal type. Traditionally, they combined features of elitist democracy with those of a more radical, egalitarian, ideal type: "participatory democracy."21 Social conditions in many non-Western countries are compatible with Schumpeterian democracy precisely because it discourages participation. Few such societies have the extensive middle classes that underpin liberal democratic institutions in the West; rather, there is frequently an extreme concentration of wealth and power. Electoral competition among members of the elite is of minor consequence for the society as a whole, whereas broad participation in grassroots movements could lead to instability, as unwelcome to international investors as to the indige-

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nous elite. Western governments and business, formerly quite comfortable working with dictatorships so long as they ensured stability, now support democracy as a legitimizing principle on the assumption it will take a Schumpeterian form. This may indeed secure a degree of legitimacy for the neoliberal order, but it is a "thin" legitimacy that may well prove to be brittle, if put to the test. CONCLUSION The period that has come to be identified with globalization has coincided with the ascendancy of neoliberalism and the eclipse of its rival, social liberalism, but globalization does not require neoliberal policies. With the major exception of East Asia, whose advance had begun in the social-liberal era and the sustainability of which was called in question by the financial crisis of 1997-1998, the age of neoliberalism has seen a narrowing of horizons and options. In the West there is greater inequality, high unemployment, and a reduced willingness to maintain humane social support for the disadvantaged—conditions exacerbated by the ideology's uncritical support for the market and devaluing of government. The scope of neoliberal ambitions is revealed in the cultural revolution in public institutions, which is implemented when political circumstances permit, with consequences not yet widely understood. The costs of the neoliberal ascendancy, however, are borne primarily by those large sections of the developing world that are marginalized in the globalizing economy and where neoliberal policies fall far short of what would be required to promote development. The tardy acceptance of the need for an effective state and a more pragmatic rhetoric does not imply abandonment of the neoliberal paradigm, but it deflects attention from the more fundamental problem of the lack of resources allocated to development needs. In these circumstances there is little prospect that promoting classical human rights and minimalist democracy can cause significant improvement or provide an adequate normative basis for a neoliberal order.

NOTES 1. The original Bretton Woods system of fixed exchange rates had become unworkable, but its replacement by a "deregulated" system—floating

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exchange rates and uncontrolled capital movement—as distinct from a modified system of regulation was a choice by neoliberally inclined U.S. policymakers. The issue is discussed further in Chapter 6. 2. For example, the widely discussed "Tobin tax" proposal, that all international money transactions be taxed at a low level—which would be relatively costly to speculators, who make frequent transactions at low margins, but not to long-term investors—could be undermined unless all governments agreed to levy the tax. More generally, Helleiner makes the point that governments seeking to regulate financial transfers will be at a competitive disadvantage in relation to those that deregulate. Thus for all states interested in having a strong financial sector in the economy, there is a systemic pressure to deregulate (1994b, 195-209). 3. The significance of the stated rate depends on how it is applied, as well as on concessions, deductions, and the like (for table and discussion, see J. Kelly 1998); nonetheless, the data show that the pressures to homogenize are often overstated. 4. Such measurements are highly problematic when low growth coincides with negative social trends. See discussion in Argy (1998, 13-30). 5. There are more creative ways of disguising unemployment, such as offering a certificate of incapacity to persons facing dismissal. The Netherlands has a low rate of unemployment but a high rate of invalidity. 6. Some attempts to do so are discussed in Chapter 7. 7. Thatcher and Reagan, it is true, did not disguise their economic ideologies, but their electoral success can be attributed to wider causes, not least the perception of the weaknesses of their predecessors, in the U.S. case mainly in foreign policy. Both did offer a vision, at once individualist, nationalist, and nostalgic, in circumstances where these values found resonance. 8. The system was not free from abuses, but they paled into insignificance compared with the pathologies of that which succeeded it. In the words of a U.K. vice-chancellor; "the whole university machinery was ideally suited to allow staff to teach, to research, to debate and to publish—in fact to conduct their contractual activities—without let or hindrance except the laws of the land, and with at best minimal direction from their employer" (Ryan 1998, 27). 9. On this point, as on many others, the United States constitutes a partial exception; the economic boom in the 1990s appeared to revive the traditional optimistic American outlook. But that outlook is neoliberal for other reasons. 10. Regional variation in economic growth in the developing world has increased markedly since 1980. South Asia, for example, shows the opposite trend to sub-Saharan Africa: average annual per capita growth increased from 1.2 percent (1965-1973) to 1.7 percent (1973-1980), 3.2 percent (1980-1989) and 3.6 percent (1990-1998). During the decade 1985-1995 only two regions experienced a perceptible increase in average annual per capita income (East Asia, 7.2 percent; South Asia, 2.9 percent). Two regions marked time: Latin America, 0.3 percent; the Middle East and North Africa, -0.3 percent. The former communist countries experienced a sharper decline (-3.5 percent) than sub-Saharan Africa (-1.1 percent), though from higher levels at the outset (World Bank 1997,215).

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11. Six small donor countries increased their aid during the period 1987— 1998, and one major donor (the U.K.) remained at a constant level, about 0.28 percent. The highest donors, Denmark, Norway, Sweden, and the Netherlands, remained within the range of 0.7 percent to above 1 percent; France was about 0.6 percent until 1995. Among those with declining levels of aid were the United States (0.20 percent to 0.10 percent); Germany (0.39 percent to 0.26 percent); Australia (0.34 percent to 0.27 percent); and Canada (0.47 percent to 0.29 percent) (Downer 1998, 86; OECD 2000, 69). 12. For an earlier discussion by the author, see Richardson (1990). 13. See, for example, Ravenhill and Matthews (1996). As Pieper and Taylor note (1998), the lessons of experience could have been read quite differently. The pattern discussed in Chapter 7, whereby neoliberal policymakers seize on an emergency to impose a total agenda, can also be seen in this context. 14. For a more radical analysis and program, see Barratt Brown (1995). 15. The World Bank, for example, sees some benefit in Chile's restriction of inward capital movements (1999, 79). 16. The Bank avoids this issue while highlighting the weaknesses of certain existing public systems (1999, 146-148). For a pessimistic appraisal of water privatization in a particular instance, Bolivia, see Palast (2000.) 17. Major categories of lending in the mid-1990s included structural adjustment, 23 percent (Shihata 1995, 5), and agriculture, energy, and transportation (42 percent); the fastest growing categories were the financial sector and public sector management (Caufield 1998, 307). 18. For the signatories of the two covenants, see O'Flaherty (1996, 38^15, 70-79). The main rights recognized in the former are the right to work; to "just and favorable" conditions of work; to join a trade union; to social security; to protection of the family; to an adequate standard of living, health care, and education; and to participation in cultural life. The latter covenant recognizes the right to life; prohibits torture and slavery; recognizes the rights to "liberty and security of person" (thus prohibiting arbitrary arrest and detention); freedom of movement; equality before the law; the right to privacy; freedom of thought, conscience, and religion; the right to peaceful assembly; freedom of association; protection of the family and of children; the right to participation in public affairs (including the right to vote in free elections); and prohibits all forms of discrimination (Brownlie 1967, 138-169). 19. The Australian Labor Party government (1983-1996) provides a striking instance of the ambivalence of Western policies on economic and social rights. Foreign Minister Bill Hayden introduced a new emphasis on economic and social rights in 1986 (Russell 1992, 29), but his successor Gareth Evans softened this in speeches that spelled out the rationale of Australian policy; in his co-authored book he dismisses economic and social rights with arguments reminiscent of Maurice Cranston, noted earlier: Some argue that human rights embrace such things as the right to clean air, good health or to live in peace . . . But such an approach tends to empty the concept of human rights of all but its rhetorical

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c o n t e n t . . . A more manageable approach is to focus on those rights of an essentially civil and political character which the international community has agreed . . . are universal in character (Evans and Grant 1991, 144-145). The argument overlooks the equal level of international agreement on economic and social rights and avoids all mention of subsistence rights. 20. For a discussion of the weakening of the moral standing of the "South" since the 1970s, see Furedi (1997). 21. This is often seen as a separate tradition and contrasted with liberal or representative democracy. But it can be argued that most democracies are hybrids of several such ideal types. For a discussion of participation that argues Schumpeter misrepresented the classical theorists, see Pateman (1970).

6 FORCES SUSTAINING NEOLIBERAL IDEOLOGY

This chapter inquires into the forces that maintain the continuing dominance of neoliberal ideology. Some circumstances favoring the initial turn to neoliberalism have been noted previously. These included the apparent failure of Keynesian economics in face of the problems of economic management in the 1970s; the partial erosion of governments' capacity to raise taxes through the mobility of capital, coinciding with increasing welfare demands; and the debt problems of many third-world countries. The question is why, in the face of its high social costs and the relatively small number of beneficiaries, neoliberal ideology has remained dominant, seemingly beyond challenge. To speak of the dominance or ascendancy of neoliberalism is not to refer simply to governments of the " N e w Right" or to international financial institutions but also, and more tellingly, to the constraints and pressures experienced by all governments to remain within parameters set by neoliberal ideology—just as, previously, governments of the right had found themselves constrained to remain within the parameters of social liberalism. There is scope for variation in policy and there may be considerable distance between rhetoric and practice, but there is also a policy agenda that is constantly pressed by supporters of the ruling ideology. Three reasons will be investigated; the first is primarily structural, the second both structural and cultural, and the third cultural. The first is the changing balance of political forces in the Western countries that dominate the international system—changes in the coalitions whose support is required for effective government. This will be seen to have an external as well as an internal aspect: globalization affects the inter-

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nal balance, in particular through strengthening the position of internationally oriented business and finance. The second is the role of the United States, whose structural and soft power in the international economy is unprecedented and whose political culture, as we have seen, is little influenced by social liberalism. The third reason is less familiar and will therefore be discussed more extensively. This is the role of economics—the discipline and the economic discourse associated with it—in legitimizing the neoliberal order. This has several aspects. One is the way neoliberal ideology, although it is a simplified and extreme version of what the discipline has to offer, is able to draw on the "scientific" authority accorded to the discipline. A second is how an intellectual shortcoming of the discipline, its blind spot concerning power, becomes an ideological asset, shielding the powerful from scrutiny. A third is the broad cultural influence of the discipline's economic individualism, with its tendency to downgrade public and social values. And a fourth is the prominence accorded to the economics profession, such that the notion of a secular "priesthood" becomes something more than a familiar metaphor. While this need not equate with the promotion of neoliberalism, in practice the section of the priesthood that occupies key institutional positions is committed to the neoliberal cause.

CHANGING COALITIONS Governments in modern industrialized democracies rest on the support of fluctuating coalitions of interests, reflecting multiple cleavages among occupational groupings and social classes, regional and urban/rural differences, religious and ideological affiliations, internally and externally oriented interests, and so forth. In the short run electoral outcomes can normally be explained in terms of political parties gaining or losing support within such groupings. In the longer run there may be relatively stable coalitions among major groups, sustaining support or even political dominance for a particular party, such as the New Deal coalition supporting the Democrats in the United States for several decades. Patterns of political party formation and of informal coalitions vary from country to country, rendering hazardous any attempt at more precise generalization at this level. Yet certain uniformities can be observed in the pattern of long-term changes in Western societies, especially if the focus is extended to

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include not just electoral outcomes but the changing character of the modern state. For example, the welfare state developed gradually and unevenly from modest beginnings in Britain and Germany in the later nineteenth century, through the vicissitudes of the interwar years, to be consolidated and extended along with the mixed economy in the decades after 1945. In place of the acute ideological conflict of the interwar years, the latter period saw the emergence of broad support across the political spectrum for liberal democracy and for this kind of state. Ideological conflict was not extinguished, but the limits of the politically practicable reflected the hegemony of social liberalism, a broad centrist approach that did not challenge the capitalist economic system but sought to mitigate its disruptive and polarizing tendencies. The main theoretical explanation of this pattern in terms of changing coalitions is offered by the neo-Gramscian school of thought in international political economy. 1 At the risk of oversimplification, Gramscian theory can be seen as a development within marxist thought that seeks to give due weight to agency as well as structure. It conceptualizes the relation between the political and economic in a way that goes beyond the crude ideal-types of "basis/superstructure" or "ruling class," yet retains sufficient generality to capture what certain societies (Western, liberal, capitalist) have in common despite their historical and institutional differences. Thus the "historic bloc" refers to a coalition of forces that seeks to establish a "hegemonic" regime-—defined as one whose rule depends mainly on consent, not coercion—in which the leading class or elite offers genuine benefits to other major classes or interests. Radicals who seek to challenge a regime, whether hegemonic or merely oppressive, must construct their own historic bloc. A ruling coalition is not understood in purely electoral terms but in terms of those with wealth and economic power striking a bargain with those who command the power of numbers, a bargain likely to include the essential character of the state, whose leading members may be parties to the bargain. Ideology has an important place in this theoretical schema. It provides a social vision that promotes the solidarity of the historic bloc, depicting the preferred order as legitimate, normal, and inevitable. The theory sees the contemporary state and its ruling coalition as embedded in transnational economic and social structures; there is no dichotomy between the internal and external. Thus for Cox (1987) and for Gill (1990) the weakening of the coalition supporting the mixed economy/ welfare state and its replacement by a coalition supporting neoliberal

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restructuring is bound up with one aspect of globalization: the massive increase in the power of that sector of business and finance whose interests are primarily international. Drawing on this approach, we may note some features of the social-liberal coalition before turning to the neoliberal coalition in greater detail. The Social-Liberal Coalition This "coalition" may be viewed as the crucial bargain between leading business interests, the labor movement, and the state that underpinned the post-1945 economic and political reconstruction. Business and finance, chastened by the experience of the Great Depression and confronting a left-wing political mood in Western Europe as well as the external Soviet threat, were ready to accept the mixed economy and Keynesian economic management as the lesser evil. The experience of the war economy, which had strengthened state power in this regard, was also an important factor in explaining the postwar embedded liberal compromise. The ensuing expansion of the welfare role of the state and the level of public expenditure provided a further body of supporters for the hegemonic coalition. There were f r o m the outset, however, important d i f f e r e n c e s between European and American understandings of the postwar settlement. These were not sharply defined, because of the range of issues on both sides and a large degree of overlap, but in effect the priorities differed on each side of the Atlantic—the Europeans having a greater interest in promoting internal economic and social goals that presupposed a high degree of state autonomy, and the Americans having a greater interest in achieving further international liberalization, especially where this equated with greater access for U.S. exports and capital. Moreover, the mixed economy was far more accepted and more real in Europe than in the United States, where opinion remained suspicious of socialism in all its forms, and it did not endorse the sharp distinction between social democracy and Soviet-style communism that was axiomatic in European thinking. The concept of a tripartite corporatist-style coalition between government and the larger, more organized sectors of business and labor that provided essential support for the embedded liberalism of the postwar decades is a valid ideal-type, but the variations between different countries were considerable; more important, the tensions generated within these relationships were such as to endanger the long-term via-

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bility of this kind of hegemony, especially when economic conditions became less favorable, as in the 1970s (Cox 1987, 224-226). 2 One of the more prominent factors tending to erode the precarious balance of political forces underpinning the social-liberal order was the increasing autonomy of financial interests, which had opposed the constraints on capital movement that were an integral part of the postwar settlement and which were able to partially free themselves from these controls through operating in the Eurodollar markets that developed in the 1960s. A further crucial factor in weakening the postwar welfarist coalition was the declining power of organized labor, whose sheer numbers combined with a strategic location in the economic system and backed up by the latent ideological challenge of radical socialism had provided sufficient bargaining power to render it a necessary partner in any stable social compromise. By the mid-1970s several trends, all of them tending to weaken this bargaining power, were becoming evident. The numbers employed in the traditional "smokestack" industries were declining, both because of technological changes and through increasing competition from low-wage industries in the new industrializing countries. Increasingly, the established unions could be bypassed, either through radical changes in technology, relocating production overseas, or sheer competition from cheaper imports. 3 Part-time workers and those in the expanding services sector were less likely to be unionized. Not surprisingly, the membership of trade unions also declined, but this was more a consequence than a cause of their reduced power. Other changes tending in the same direction were a decline in working-class consciousness as the expansion of educational opportunities enabled a significant number of those from that background to move into middleclass occupations, a trend reflected inter alia in the changing composition of the parliamentary labor and social-democratic parties. None of this signified a general shift of electoral opinion to the right. Although the conjunction of Reagan, Thatcher, and Kohl in the 1980s rendered this plausible, other countries such as France, Australia, and New Zealand elected parties of the left, the United States and Britain would do so by the mid-1990s, and all the larger Western European countries by the end of the decade. The turn to neoliberal policies that was so general in the 1980s was driven from above, not from below—from Cox's upper tier of corporate management and government. Electorates continued to favor welfare services and were often sceptical of the benefits claimed for neoliberal reforms. The general

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commitment to the neoliberal agenda on the part of Western governments, whether of the right or left, was not electorally driven and did not represent the emergence of a new, broad-based coalition. The Neoliberal

Coalition

Neo-Gramscian analysts are in broad agreement in identifying the coalition that supports the neoliberal agenda. At its core is transnational business and finance, which has a single-minded interest in the construction of a global market, and thus in promoting the liberalization of trade and capital movement, and a general preference for a minimum of regulation. The interests of other, more nationally oriented elements of business are more ambiguous; some may, for example, favor tariff protection while supporting neoliberal policies in other areas. Cox identifies others closely associated with the "transnational managerial class": It encompasses public officials in the national and international agencies involved with economic management and a whole range of experts and specialists who in some way are connected with the maintenance of the world economy in which the multinationals thrive— from management consultants, to business educators, to organizational psychologists, to the electronics operators who assemble the information base for business decisions, and the lawyers who put together international business deals. (Cox 1987, 359-360)

More concretely, Gill examines a specific elite institution whose aim was to promote consensus and a common internationalizing policy orientation on the part of leaders in North America, Western Europe, and Japan: the Trilateral Commission. Its members, all at a very senior level, were drawn mainly from transnational business and banking, government, and academia (think tanks as well as universities), with minor representation from the media, law, and international organizations (1990, 233). He notes the exclusion of small-scale capital and military interests, political radicals of the right as well as the left, peace groups, environmentalists and the consumer movement, "value-oriented" intellectuals and academics whose interests were scholarly rather than policy oriented, and the underrepresentation of women, the union movement, and members of legislatures (1990, 156-161). Leslie Sklair (1997) identifies similar groupings—executives of transnational corporations, globalizing bureaucrats, politicians and professionals, and consumerist elites (merchants and media)—comprising what he terms the

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"transnational capitalist class." He suggests (1996) that this class can be identified in Australia as an elitist coalition supporting the neoliberal turn in Australian policy. Arguably, bankers and financiers, whose perspectives are constantly reaffirmed in the financial media, have an especially significant place in the coalition. Is the new coalition hegemonic, in Gramsci's sense? That is to say, does its dominance rest substantially on consent, on perceived legitimacy, or is it merely a narrowly based elite that has taken advantage of structural changes to break up the previous coalition but is not in a position to legitimize its dominance? Cox, writing in 1987, had no doubt that "it would be premature to define the outlines of a new historic bloc likely to achieve a certain durability as the foundation for a new form of state" (1987, 285). He refers to a crisis of hegemony, with tension between neoliberal and national-capitalist views of the national and world economy, and cleavages among subordinate groups. Gill (1990), while not contesting this view of the situation in the mid-1980s, presents the Trilateral Commission as part of a process in which one of these contending forces was seeking to achieve hegemony by rallying the supporters of liberal internationalism and seeking to commit the leading governments to that ideology, thus marginalizing the advocates of more autonomous national capitalisms. Through a series of coalitions based on shared interests and hegemonic concepts about the way in which the world does and should work, a transnational class fraction increasingly occupies the centre of an emerging transnational historic bloc, one with a wider leadership basis than in the era of transatlantic hegemony, and one in which the political status of organised labour is diminished. (Gill 1990, 50) It w o u l d s e e m , h o w e v e r , that the f o c u s of the T r i l a t e r a l Commission was not the legitimizing of the inegalitarian neoliberal order as such, but the broader goal of securing and consolidating an "open" world economy through governmental cooperation, as against the specter of rival economic blocs. It was not in the vanguard of neoliberalism but followed the governments in being relatively "accommodationist" toward labor and third-world demands in the 1970s, adopting the neoliberal orthodoxy only in the 1980s. Even then, with respect to development issues, commission reports in the early 1980s did not reaffirm the emerging orthodoxy but argued for greater responsiveness to third-world concerns (Gill 1990, 190, 201). One respect in which the commission did prepare the ground for neoliberalism, how-

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ever, was its controversial study, The Crisis of Democracy (Crozier et al. 1975), which propounded the "ungovernability" thesis, arguing that the radical political mobilization Western countries had experienced in the 1960s endangered liberal democracy, that expectations should be lowered, and that a degree of nonparticipation was desirable—in effect, Schumpeterian democracy was best. The questions remain: how might a relatively narrow elite legitimize its rule, and how is this being attempted in practice? Two major responses may be considered. The first would question the premise of the narrowness of the dominant coalition; here the argument would be that many indeed benefit from opportunities opened up by the global market, becoming in effect parties to an emerging historic bloc: they are not organized, hence not politically visible, but are passive supporters. The second accepts the premise, suggesting that the elites are promoting a culture and an ideology intended to legitimize the order they dominate. The first response correctly identifies the widely shared benefits of trade liberalization, for example, but is misleading insofar as these have been realized throughout the postwar period, as much under embedded liberalism as in recent years. Liberalization has always been a long-term process and remains subject to the internal priorities of the major states; the turn to neoliberalism was not needed in order to achieve these gains. The balance sheet for financial liberalization, on the other hand, remains uncertain. The clear beneficiaries are relatively few and are concentrated in certain elites, but for many societies as well as individuals, the risks are more salient than the benefits. While the overall effect of the neoliberal agenda is to enhance inequalities, however, the gains are not limited to the big winners at the top: sizable numbers achieve gains, for example, through tax cuts for those in medium- to higherincome brackets or through the expansion in shareholding. The new pattern of inequalities has been conceptualized in ways that vary in detail but not in essentials. Will Hutton puts forward the ideal-type of the thirty-thirty-forty society. The bottom 30 percent are the disadvantaged, above all the unemployed and the economically inactive, who have become significantly worse off. The middle 30 percent are the marginalized and insecure, those dependent on part-time or short-term employment and with a weakened social safety net. Those whose market power has increased constitute the top 40 percent; here he includes those with secure full-time employment as well as the wealthy (Hutton 1995, 105-110). If this model, based on Britain's expe-

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rience under Thatcher and Major, is valid, the coalition supporting neoliberal restructuring would be sizable but considerably less than a majority, even if it included all of the top 40 percent. John Kenneth Galbraith's Culture of Contentment (1992) depicts an affluent, contented majority and an underclass, but on closer examination the stratification is not dissimilar. The crucial point in the United States, a society with low voter turnout, is that the "majority" refers to voters, not citizens; those caught in the middle see no benefit for themselves in siding with the underclass, nor is there any ideological basis for their doing so. Such depictions point less to the emergence of a new hegemonic coalition than they do to ways a relatively narrow elite may find sufficient support for a program from which the gains are massively skewed toward the top. Supporters are found among the haves, not the havenots, and among particular upwardly mobile groups identified by Robert Reich as "symbolic analysts"—those engaged in "problem-solving, problem-identifying, and strategic-brokering activities" (Reich 1991, 177). Their skills are in particular demand, and many are among the winners in the world of flexibility, insecurity, and deregulation. But not all of these, still less all those in the top 40 percent, can be assumed to support the neoliberal model as against a potential social-oriented alternative. It thus becomes necessary to examine the second interpretation of the legitimizing of the power of that elite, namely through the promotion of a supportive culture and ideology. The creation of a favorable cultural climate involves diffuse activities, as is evident, for example, in the promotion of consumerism. This is long-standing: advertising has been prominent in Western societies for many decades. Arguably, the cumulative effect of advertising and related pressures is to enhance people's readiness to identify themselves first and foremost as consumers, at a time when other identifications are weakening. It is startling to learn that shopping is the second most time-consuming leisure activity in the United States, after watching TV (Goss 1993, cited in Sklair 1997, 531). The consumerism that is so expensively promoted is essentially passive: choice from a limited array of given options, as on the computer screen and as modeled in game theory. The capacity to critically assess those options for safety, reliability, side effects, and the like lags far behind; the resources available to the consumer movement are puny compared with those for advertising and promotion and are reduced further by neoliberal governments. Moreover, to the extent that governments follow neoliberal logic, they refrain from imposing stan-

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dards, even though the consumer often lacks the information to make a considered judgment. In these circumstances the image of consumer sovereignty is one of those myths that does more to disguise than depict reality. The question of who decides what options will be given is not asked. The promotion of the market as the quintessence of the economy has been especially prominent since the end of the Cold War. Many other images might be invoked: the mixed economy; the industrial, corporate, or information society; the world of the TNC; the global business civilization. The market image enhances the role and self-image of the consumer, as against the producer, the employee, or for that matter the citizen, and sets aside the question of power. As the imagery of the consumer has advanced, that of the citizen has receded, along with the disparagement of the state, the politician, and the public sphere. The individual at the core of neoliberal doctrine is a consumer, exercising choice among given purchases, not a citizen participating in shaping the life of the community. The culture of individualism is promoted in such a way as to marginalize considerations of community, solidarity, or justice—to narrow down and homogenize rather than enrich the choices open to the majority. 4 But to the extent that such a culture takes hold, the legitimacy of the new power structure is not so much positively endorsed as it is protected from challenge. This, however, is at best a thin legitimacy, better described as acquiescence, and this places a heavy burden on other aspects of the ideology. The controlling position of the elites is not justified explicitly through an authoritarian doctrine or the open promotion of inequality but through projecting an image of the normality, necessity, and essential virtue of the neoliberal world. Along with the promotion of negative freedom and the individualism just discussed, there is a tacit denial of other values (such outbursts as that attributed to Thatcher—"There is no such thing as society"—are rare). As we shall see, the doctrine relies rather heavily on a certain version of economics for the credibility of its claims. Neoliberal ideology, however, may well be a double-edged sword, like the liberalism of the former European colonial rulers that could be turned against them by nationalists invoking liberal principles. The tensions inherent in an elitist, inegalitarian concept of liberal democracy render it similarly vulnerable: liberal norms of equal rights and freedoms can, as we have seen, provide the basis for a telling critique of neoliberal doctrine. It may be concluded that even though the

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neoliberal coalition is dominant for the moment, it faces major problems in seeking to achieve hegemony in the Gramscian sense.

THE UNITED STATES: VALUES AND POWER Consumerism and individualism were first and most fully developed in the United States, which remains their exemplar and most vigorous promoter. But the extent to which neoliberalism is a global projection of American values requires closer examination. It can reasonably be said that the neoliberal ascendancy reproduces the characteristic American version of liberalism. This is not the pure, doctrinaire version of libertarian theorists but rather, in accord with traditional American attitudes, a pragmatic version that leaves scope for accommodating ad hoc deviations. Nonetheless, as a mind-set it is near the neoliberal end of the broad liberal spectrum, especially when Americans look abroad. As we have seen, American thought showed little trace of the turn to social liberalism that was so pervasive an influence in Europe. Wilsonian liberalism shrugged off earlier reservations about democracy but otherwise did not go beyond classical liberalism. Roosevelt was more pragmatic, both at home and abroad, but there was no reformulation of liberal theory to justify the state interventionism he and his successors practiced; classical Lockean liberalism remained deeply embedded in the culture. The values and silences in neoliberal doctrine are characteristically American. The narrowing down of human rights—denial of the validity of economic and social rights—is in accord with American political culture. Those who have challenged it, such as Secretary of State Cyrus Vance, have not done so very vigorously, and they have been unable to persuade Congress to modify the traditional view. This American view dominates international discourse, and the asymmetry of the United Nations human rights machinery, as noted above, further underlines the U.S. capacity to shape the international agenda. Much the same can be said of the promotion of democracy. With varying degrees of commitment, other Western governments support the U.S. drive to promote democracy—and its pragmatic exceptions. The neoliberal, Schumpeterian version is essentially the contemporary American understanding of democracy, albeit formalized in a way that abstracts from the features that render American democracy more robust and vital than most of its Western counterparts. This "low inten-

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sity" democracy avoids any suggestion of empowering the people, especially the underprivileged, but is essentially the "polyarchy" or "civil society" of those elites who support formal electoral processes and also the market economy, the preservation of existing property rights and privileges, and external liberalization.5 The neoliberal state and its ethos—the shrinking of resources and the loss of esteem suffered by public institutions, the commercialization of the former public sector, the climate of opinion that applauds tax cuts irrespective of their consequences for welfare, education, or cultural pursuits—bear a striking resemblance to the ethos J. K. Galbraith identified and lamented in the United States over four decades ago. In The Affluent Society (1958) he exposed the conventional wisdom that rendered right-thinking Americans entirely comfortable in a world where private opulence coexisted with public squalor. The ills then apparent in U.S. cities—schools old and overcrowded, the police force undermanned and underpaid, parks and playgrounds inadequate, the streets filthy, and transportation overcrowded, dirty, and unhealthy (1958, 196)—are becoming all too familiar in other Western societies. And there are additional ills: the new homelessness, cultural impoverishment, and the overstretching of resources of institutions as diverse as hospitals and universities. The political culture of other Western societies had long sustained a more even balance between public and private, but the neoliberal canonization of the market fosters the same attitudes that have long prevailed in the United States. American internationalist attitudes give expression to the pragmatic neoliberalism of business and political elites. As in Galbraith's conventional wisdom, self-interest and virtue are inseparable, the one unmentioned, the other confidently proclaimed. Liberalization, of capital flows as much as trade, will benefit all. Exceptions are tolerated where a strong government such as China insists on controlling capital movements, but in general, and especially when they require financial support, states are pressured to liberalize, risks and social cost notwithstanding. There is little awareness that indiscriminate liberalization may promote the interests of the strong at the expense of the livelihood of the weak. We may approach the question of the manner in which U.S. power enables the United States to project its version of liberalism by considering the major dimensions of power in contemporary international relations—-the geopolitical, the economic, and the cultural. The experience of the 1990s, the constant reiteration that the United States is the

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sole superpower, and the increasing characterization of the world as unipolar have laid to rest the debates on the decline of American hegemony that were so prominent in international political economy and even in U.S. politics in the 1980s.6 In view of these rapid shifts in perception, the issue is best approached in the perspective of developments since 1945. Geopolitical Power In the security domain, the superpowers established their asymmetrical blocs in the initial phase of the Cold War: on the Soviet side a grouping of client states dominated by the one great power (briefly allied to a second power, China), and on the Western side an unprecedented constellation in which the remaining former great powers—Britain, France, Germany, and Japan—were allied to the United States and accepted a degree of strategic subordination. Their security was underwritten by the U.S. nuclear guarantee, and two of them (Britain and Germany) were integrated into the U.S.-controlled NATO structure. Subsequently, the Soviet Union acquired a few third-world allies and the United States rather more, while still more states were informally associated with the latter and its partners. The ending of the Cold War has not seen the kind of moves toward independent great powerhood, through acquiring nuclear weapons, that neorealist theory had predicted in the case of Germany and Japan, but rather it has confirmed the continuity of U.S. strategic hegemony. In the new context it is the United States alone that can deploy imposing armed force in any theater of its choosing, and its massive investment in the application of information technology in warfare is introducing a new distance between it and any potential competitors. For better or worse, the United States decided to insist on the enlargement of NATO; far from becoming less relevant, the U.S. Cold War alliance system is determining the security parameters in Europe and Asia Pacific, underpinned by varying degrees of dependence on American technology, intelligence, and logistic support. The European powers do not envisage any major military involvement without U.S. support and even participation. The same is true of the UN Security Council, newly relevant in the post-Cold War environment. In effect, depending on the degree of international support available, the United States is in a position to choose between acting through the UN or through NATO, seeking ad hoc support from certain of its allies or acting unilaterally. Russia and

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China have a certain capacity for independent action but only at high political and economic cost. This geopolitical order cannot be considered in isolation from the socio-economic. If the Cold War can best be viewed as an "inter-systemic conflict" (Halliday 1993a), in the subsequent order one of the competing social systems has prevailed. Whether this is regarded as a new kind of "globalized" system or merely as an international system dominated by a coalition of capitalist liberal democracies, the United States plays a wholly disproportionate role in maintaining the framework of order/security on which the system depends. 7 The liberal democratic coalition is not just an alliance of states but is linked by dense transnational networks arising from the shared and complementary interests of many actors in those societies, notably the most influential economic and financial elites. These actors are entirely satisfied by the security that derives from American strategic preponderance. This system differs fundamentally from the pattern of relations that characterized the modern states system from the seventeenth to the midtwentieth century, in which the leading actors were independent great powers, in principle in a Hobbesian state of preparedness for war against one another at any time. Even in the years before 1914, the previous era of economic interdependence, strategic and imperial tensions were so serious that the elites who preferred peaceful relations accepted war because they feared being entirely dispossessed by the victors. There are no such threats and fears among the elites at the present time, so far as the liberal democracies are concerned.8 The mechanisms by which geopolitical dominance assists the projection of American values are not well understood. Yet it is clear that "victory" in the Cold War had political repercussions analogous, up to a point, with victory in actual wars. It is not that the victor's ideology is universally adopted or imposed, but it enjoys enhanced prestige and support internationally, and where there is a political vacuum, the victor's model is the most likely to be adopted and its advisers most likely to be sought out. These tendencies could be observed in the aftermath of the Cold War: command economies were to be reconstructed along lines proposed by U.S. advisers drawn from the economics profession. That other, "state-capitalist" models might be more appropriate or that the whole issue might need to be rethought in the light of indigenous institutions does not appear to have been seriously considered. Russia's

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subsequent economic difficulties have cast a shadow over this kind of high-profile economic advice; this particular mechanism for projecting influence could be a wasting asset. Geopolitical power, however, also has a more general enabling function. That is to say, it is the absence of any major geopolitical rival to the United States that makes possible the projection of American values worldwide. As the Cold War showed, a second superpower was able to block this in a significant part of the world. A stronger power or coalition could have restricted American influence much more drastically, as U.S. policymakers were acutely aware—hence their determination to ensure that the major centers of economic power should remain within the American ("Western") system. In the event, America's unassailable geopolitical position enabled its soft power to erode the foundations of the Soviet system. Fred Halliday's comment that the T-shirt, not the gunboat, brought about the collapse of communist rule (1993b, 19) is only partially correct: if the Soviet Union had been able to achieve the geopolitical ascendancy, the position would have been quite different. A state does not have to be a superpower in order to reject Western cultural influence, as the example of Islamic fundamentalism makes clear. U.S. geopolitical power does not extend to the point of eliminating such regimes, though it can work against them politically and economically; in addition, they experience tension between maintaining ideological purity and the pragmatic attractions of participating in the global economy. Geopolitical power, we may conclude, determines the geographical extent of American influence, but within those limits the means for projecting it are primarily economic and cultural; moreover, these are not two separate domains but are closely interdependent. Economic Power

If the United States enjoys unprecedented geopolitical dominance in the modern states system, its economic role is hegemonic in a much more thoroughgoing sense than that of nineteenth-century Britain, the only partial precedent. America's weight in the world economy is far greater than was Britain's at that time: the latter ranked only third among the European powers in GNP both in 1830 and 1913, and it fell behind the United States in industrial production before 1900 and behind Germany soon after (Mann 1993, 262).9 And whereas Britain never took the lead

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in the science-based "second industrial revolution" in the late nineteenth century, the United States has been and remains in the forefront in the development and application of new technologies. In the case of trade, Britain could impose its preferred free trade regime only within the bounds of its empire, including the informal empire where it had a dominant economic presence. Elsewhere, liberalization depended on the choices of others, with several of the main states turning to protection later in the century. By contrast, the United States took the lead in establishing the international trade regime after 1945, in pressing for successive rounds of negotiated liberalization, and more recently, in establishing an institution with unprecedented powers to enforce agreed-upon norms—the World Trade Organization.10 If the overall regime can be ascribed to U.S. initiative, it serves the interests of the industrialized world as a whole, and specific outcomes at each stage are the product of hard bargaining, especially among the three main trading powers, the United States, Japan, and the European Union, which reflects inter alia the salience of trade issues in domestic politics. The opposite is true of financial liberalization, where the issues are little understood by domestic political actors. "Even businessmen and economists in government defer to international monetary specialists in a way they would never defer on issues of fiscal policy or domestic monetary policy" (Dam and Shultz, quoted in Helleiner 1994b, 204). Here American dominance is more complete; the international monetary system was constructed by the United States at Bretton Woods, in broad agreement with Britain and in accordance with embedded liberal values, which prevailed for the time being, even in American politics, over the opposition of New York financial interests (Helleiner 1994b, 25-50). This system of stable exchange rates and controls on capital movements was radically reconstructed in the 1970s in accordance with a unilateral reversal of policy by the U.S. government, which now supported the financial community's preference for the free movement of capital and floating exchange rates. Britain had assisted in creating the conditions for this change by establishing the flourishing Eurodollar market, but the United States played the decisive role, declining to negotiate on European and Japanese proposals to introduce cooperative controls on capital movements in order to retain a modified Bretton Woods system (Helleiner 1994b, 101-111). Scholars have advanced several plausible reasons for this radical change in American policy, which put in place one of the main building blocks of the neoliberal world (Helleiner 1994b, 111-122). First, it

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enabled the United States to resolve a pressing immediate need—to correct an external imbalance without having to undertake painful internal adjustments. Second, the United States expected to be the prime beneficiary of financial liberalization, due to the strength and depth of its financial sector and the international role of the dollar. These expected gains, like the U.S. ability to prevail in changing the regime, may be seen as a major instance of its structural power in the global economy.11 Third, neoliberal thinking was already influential among policymakers, providing a broader rationale for the change and one more acceptable elsewhere, especially in financial circles. The American national interest coincided with a certain conception of the international public good. The ensuing international financial system is one in which the "international business civilization" (Strange 1990) can flourish, but it is especially the American capitalist model that flourishes while, as we have seen, the European and Japanese models are subject to stresses related (or so it is perceived) to the social costs their firms are required to bear. The U.S. presence looms large in this business civilization. American business schools provide the model for emulation and attract the ambitious worldwide. Corporations and even governments seeking external advice on management tend to turn to the large American consultancy firms, and the same is often the case in advertising; these firms enjoy advantages of size, specialization, a greater range of experience, and the mysterious ingredient of prestige, which local competitors are unable to match. A further aspect of America's economic preponderance is its role in the international financial institutions, the IMF and the World Bank. As the largest contributor, it enjoys commensurate voting rights, and the location of the two institutions in Washington makes for a degree of influence by U.S. policymakers, typically with Wall Street connections, which is enhanced by the like-mindedness indicated by the perception of a Washington consensus. Proximity to Congress also serves as a reminder that anti-internationalist prejudices can easily be mobilized to restrict the institutions' funding, were they to lose the support of the current U.S. administration. Culturdl

Influence

The third dimension of America's global influence, "soft power" (Nye 1990, 32-34, 193-195), comprises both a pervasive influence on popu-

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lar culture and lifestyles and a more focused influence on elite culture and education. In some respects these are closely bound up with economic power. For example, the size of the U.S. market permits economies of scale that enable American films to be distributed worldwide at prices far below those of most of their competitors. American popular culture has many attractions: through skillful advertising or for other reasons such as their informality and their special orientation toward the young, American styles and fashions have extraordinarily wide appeal. Whether in dress or entertainment, they offer a readily available and vigorously marketed alternative to traditional styles. Moreover, America retains the image of the society at the forefront of change, showing the way to the rest of the world—a self-image reaffirmed by outsiders for generations. Even those who vehemently reject U.S. cultural imperialism tend to fear that this image contains an element of truth. They may, for example, acquiesce in certain aspects of "Americanization" in order to resist others more effectively. Cultural influences at the elite level are no less striking. U.S.trained graduate students hold senior positions in business, government, and the universities in many countries. And although other countries also attract foreign students, the United States remains in the forefront in many of the sciences, as in economics, business, and policy studies. This kind of preeminence has no precedent in modern history: while Western culture profoundly influenced the non-Western world during preceding centuries, the impact of any particular national culture was limited. Needless to say, not all students return with positive attitudes toward the host country, but it is likely that relatively few are strongly and consistently negative. Moreover, irrespective of these attitudes, significant intellectual influences are likely to remain with the student. The cultural influence does not equate with neoliberalism, but it provides a cultural environment in which it can flourish. The elements of popular culture are something of a seamless web. Consumerism merges into economic individualism, the business world and the market have positive connotations, and so far as any image of political life is projected, it is one separate from economic life: politics is a contest among personalities, and there is no role for the state in the economy. The unspoken assumptions are those of American Lockean liberalism, and students who have a more intensive experience of American life may acquire more elaborate images of the normality of U.S. political and economic practices.

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NEOLIBERAL ECONOMICS Formidable structural support for neoliberalism has been found in an ascendant transnational elite coalition and in the interests of the sole superpower. It remains to examine those who formulate the ideology, translate it into a set of policies, and monitor its implementation, as well as the nature of their authority. If the role of the ideology is to confer legitimacy on an order that manifestly advantages certain elites while generating widespread problems, risks, and deprivation, from what sources does it derive its legitimizing power? We have seen that the neoliberal "necessities" are couched in the language of economics. The hypothesis explored here is that neoliberalism derives its authority from the discipline of economics, perceived as conferring a scientific aura on its claims, and that the formulation, promotion, and implementation of the ideology is undertaken, first and foremost, by members of the economics profession. A comparison with the role of classical political economy in nineteenth-century Britain suggests that after allowing for the differences in context and scale, there are remarkable similarities in the role of economics in both periods. The ideology of laissez-faire was widely perceived as serving certain class interests. The theories of the political economists themselves were more varied and nuanced, yet the doctrine as popularized by organs such as the Economist and propounded by governments invoked the authority of science on behalf of pure laissezfaire and, as in the case of the Irish famine, its consequences were most disastrous when there was no countervailing power to moderate its implementation. Moreover, despite their greater sophistication, the classical political economists were reluctant to endorse any governmental restriction on the working of the market beyond minimal legislation to meet the most pressing humanitarian concerns. The present setting is not only more complex, but the scale is transformed: the world, not just the U.K.; the institutions global as well as national; the bureaucracies immeasurably expanded; and economists, then a handful of scholars and publicists, now a highly influential presence in governmental and financial institutions. Yet certain continuities stand out. First, while there are many differences among contemporary economists, they share certain preconceptions, and the neoliberal orthodoxies are a recognizable distillation, however much oversimplified, of some of the discipline's core assumptions. Second, neoliberal econom-

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ics confers the legitimacy of science on a set of policies that have difficulty winning broad support. Third, members of the economics profession play a leading part in the formulation of a policy orthodoxy and its implementation. And as the repeated setbacks in Africa suggest, the ensuing policies can be most costly in the absence of countervailing power. Finally, although the personal values of many economists may be social liberal, the mind-set of the discipline is such that they offer little resistance to the neoliberal steamroller and for the most part are reluctant to advocate alternatives. Compared with the nineteenth-century precedent, there are also major differences. First is the power the orthodox section of the economics profession has come to exercise, not so much by virtue of their numbers but through occupying key positions in government and the media. Even in England, the classical political economists were no more than one policy elite among several; they were more influential in some policy areas than in others, and the extreme laissez-faire position remained controversial. Elsewhere, the approach of the "Manchester school" never achieved the same prominence. At the present time there is an absence of countervailing policy elites. Governments proclaim neoliberal policies and are kept under pressure by international institutions such as the IMF and the OECD to maintain their commitment to liberalization and deregulation, as well as by private financial institutions. The body of ideas that rationalizes all this is constantly propagated by the economically orthodox. A second difference relates to the nature of the elite culture that is thus propagated. The early political economists took for granted a broad classical education and necessarily communicated with others whose intellectual frameworks differed from their own. Today's economists are the product of an increasingly specialized training, in which even economic history is no longer deemed essential, let alone the humanities or other social sciences. Increasingly, members of the policy elite thus educated communicate with the like-minded, in the language of a discipline whose biases and silences are a source of continuing alarm to outsiders, and see no need to concern themselves with ill-informed criticism by the uninitiated. The power of the profession is not just a matter of occupying key positions but of controlling the language of policymaking. Third, as we have seen, the effects of this mind-set are not limited to the economic domain but flow out into the reshaping of public institutions of all kinds, along lines deemed to be those of the private sector.

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The former ethos of public service is replaced by a new competitiveness, a cult of efficiency in the pursuit of assigned goals and missions, an elevation of measurement and cost cutting, a disregard for neglected values, and a lack of awareness of the extent the new practices open the way to arbitrariness and politicization. The language in which these practices are rationalized, drawn from current business jargon as well as economics, renders communication and criticism from alternative frameworks ineffective. All this amounts to a clash of cultures or paradigms, in which power is for the time being in the hands of those employing what might be termed the economic discourse, and in the absence of genuine and open debate, criticism from without has an increasingly polemical tone. 12 Thus an orthodox doctrine, propounded by an elite occupying key positions and extending its reach through what amounts to a cultural revolution in public institutions, provides a powerful ideological underpinning for an order that advances the interests of a new transnational coalition and is congenial to the American superpower. The familiar image of a secular religion, it will be argued, merits something more than a passing mention. Considered as a secular priesthood, the orthodox mainstream of the economics profession exercises power in a way that promotes the solidarity and self-confidence of the new rulers and the acquiescence of the ruled. Neoliberâlism

and the Economics

Discipline

The new orthodoxy enjoys an ambivalent relationship to the economics discipline. Its intellectual origins are as much in social philosophy as in economics. Friedrich Hayek was an early and persistent critic of Keynesian economics, but his determination to revive liberal free-market economics, his founding of the Mont Pèlerin Society in 1947, and his support for the first of the U.K. liberal economic think tanks, the Institute of Economic Affairs (1955), were grounded in his social philosophy, his single-minded commitment to individual freedom, and his conviction—expressed in The Road to Serfdom—that it would be extinguished in the emerging welfare state. The same obsession with a single value, freedom, is evident in Milton Friedman (1962, 1980), whose work shows a similar fusion of classical liberal philosophy and economic analysis. In the U.K., against the background of the many acknowledged weaknesses of the British economy, the neoliberals mounted a sustained

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critique of the prevailing Keynesian welfare consensus (Cockett 1994), achieving their own hegemony in the policy discourse of the 1980s. In the United States their approach enjoyed greater professional support from the outset (the "Chicago school") and also a more congenial ideological climate.13 But the neoliberal dominance of the policy discourse was not grounded in a consensus within the discipline, either in these countries or more generally. Although there was agreement on a more positive view of the working of market forces than in the generation after the Great Depression, many prominent economists were critical of neoliberal claims. Paul Krugman is among those who highlight the discipline's limitations on policy issues. Economics, he suggests, has advanced to much the same stage as medicine had reached at the beginning of the twentieth century: there is still much it does not understand and is in no position to cure. Above all, economists "don't know how to make a poor country rich, or bring back the magic of economic growth when it seems to have gone away" (1994, 9).14 For politicians, however, this is unsatisfactory. Economists who seek to catch their attention must not appear uncertain or engage in subtle qualifications. This, he suggests, leads to a Gresham's law of economic policymaking, whereby bad ideas tend to drive out the good. There is a ready market for simple policy ideas and for big claims, for economic policy entrepreneurs who "claim to know how to get the magic back" or, indeed, to create it in the first place. The appeal of simplified ideas and simple schemas has long been a familiar theme in political psychology. "Economic ideas that are likely to be attractive to policy makers are likely to have components that can be broken down into simple, intuitively appealing metaphors, analogies, or propositions" (Woods 1995, 173). Many economists are uneasy over the scientific status neoliberal policy entrepreneurs, commentators, and officials claim for their preferred economic policies. The claim is not made by the leading neoliberal theorists but permeates the public discourse. 15 J. W. Nevile, for example (1997), another critic from within the discipline, sees "economic rationalism," the Australian variant of neoliberalism, as "social philosophy masquerading as economic science." And Geoffrey Brennan devoted the opening address for a conference on economic rationalism to emphasizing the latent normative premises in the policy debate. Strictly speaking, modern neoclassical economics makes no policy recommendations at all . . . I believe that economists ought to make

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policy recommendations . . . but we ought to recognise that doing so commits us to ethical judgments . . . There is no presumption in welfare economics in favour of a minimal state [or] against "redistribution." (1993, 4 - 8 )

The fact that he found it necessary to emphasize these disclaimers is instructive. We have seen that the neoliberal formula for development was rejected by many independent analysts, and indeed some of their specific critiques were accepted by institutions such as the World Bank, leading to a limited redesigning of policy. In the case of the neoliberal agenda for Western states, there is by no means general agreement among economists that measures of microeconomic reform, deregulation, privatization, and small government can be relied on to deliver the expected benefits or that the magnitude of the gains are as claimed. In a costbenefit analysis of the Australian case John Quiggin (1996) concludes that there are frequently massive discrepancies between the generalized claims made for these reforms and the benefits that can be shown to have eventuated. He finds there is often a lack of searching analysis of costs and benefits or of concern to design programs to improve the costbenefit ratio. On other occasions assumptions are faulty, as when estimated productivity gains from privatization take no account of preceding productivity trends (1996, 202-204). This suggests that, as in the U.K., ideology rather than economic analysis is the driving force behind many neoliberal reforms (Self 1993, 93-104). A more comprehensive discussion of the relationship of neoliberalism to the economics discipline is offered by Fred Argy (1998) in the context of the Australian policy debate.16 Argy sees this debate as one between neoliberalism and social liberalism (in his terms, hard and progressive liberalism, respectively). They are divided over the effectiveness of a host of policy instruments but, more fundamentally, by the question, effectiveness for what? That is to say, the underlying differences are over values and goals. For the former school, economic growth and efficiency are paramount, and this translates into a set of "intermediate targets" for policy: productivity/competitiveness, price stability, small government, external balance, sound public finance, and high profits/investment. For the latter the goal is more broadly defined as welfare, in particular employment, equity, and quality of life, as well as growth—"a much broader, tougher and complex performance test than average incomes per head" (1998, 15). Policy, too, is much more

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complex; it is partly a matter of trade-offs among values but above all, the design of specific policies that take account of the particular characteristics of the case at hand. There can be positive linkages as well as trade-offs; for example, a successful employment program will increase demand and thus enhance growth. Argy sees a consensus in the Australian economics profession in favor of certain basic tenets of economic liberalism—"minimal government interference with the price mechanism, low tariffs and quotas, and flexible and floating exchange rates"—but division over the remainder of the hard-liberal agenda. "The economics profession does not generally view fiscal balance, smaller government and inflation-first policies as crucial ingredients for strong and sustained economic growth; and a great many rightly attach more weight to quality of life and equity" (1998, 217). 17 He does not generalize about how economists divide into two schools but has no doubt where support for hard liberalism is to be f o u n d worldwide: in treasury departments, the IMF, the E c o n o m i c D i r e c t o r a t e of the O E C D , and p r i v a t e think tanks; a m o n g central bankers, business economists, and financial analysts; and in the publications of business and financial lobbies (1998, 56-57). Argy's contribution is to provide a rationale for those qualifications of the neoliberal agenda that are frequently expressed in the profession but, in the absence of such a rationale, appear to be ad hoc exceptions difficult to defend against the confident demands of the hard liberals. T h e r a t i o n a l e also entails a c h a n g e in intellectual style, f r o m the Ricardian model-based simplicities (for which the Australian term economic rationalism is not inappropriate) to the Malthusian concern for the complexity of particular circumstances, which was noted in the earlier discussion of classical political economy. It amounts to an endorsement of Keynes's conception of economics as a moral science and the importance he ascribed to variation and change: "One has to be constantly on guard against treating the material as constant and homogeneous" (Keynes, quoted in Skidelsky 1992, 619). Keynes's conception of the discipline, however, was at the opposite pole from the narrow specialization that is conducive to hard liberalism. Referring to the paradox that economics is "an easy subject in which very few excel," he suggests that this might be because the master-economist must possess a rare combination of gifts. He must be mathematician, historian, statesman, philosopher—in some degree. He must understand symbols and speak in words. He must

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contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of t h o u g h t . . . No part of man's nature or his institutions must be entirely outside his regard. (Keynes on Marshall, quoted in Heilbroner 1972, 277)

The contrast with the contemporary assumption that the authority of science may be conferred on simple propositions that command a consensus within a burgeoning profession, especially among those of its members who hold positions of power, could not be more stark. The Current

Economic

Mind-Set

It is the countertradition, the Ricardian style, with its abstract, onedimensional, and parsimonious reasoning and its timeless, universal truths, that is embedded in neoclassical economics, the approach that replaced classical political economy in the later nineteenth century and has become so dominant that for many it constitutes the discipline-—it is economics. It is perhaps not surprising that there is no authoritative definition of the term, although there is agreement that its pioneers included Marshall, Walras, and Pareto and broad agreement on how to characterize it. Martin Ricketts, for example, introducing an edited volume, Neoclassical Microeconomics, writes that "as the foundation stone of neoclassical microeconomics there lies the simple proposition that the agents act as constrained maximizers" (1988, 1). The constraints include "a given budget, given market prices . . . a given endowment of resources or human skills, a given technological environment, and so forth." Individuals adjust their behavior in order to satisfy the maximizing condition. "The consistent and repeated application of these principles is both the strength and distinguishing characteristic of neoclassical microeconomics" (1988, 2). 18 A typical course description for microeconomics states: The object of this course is to train you in the economic way of thinking and to teach you the analytical core of economics. That core is price theory, the analysis of why things cost what they do and how prices function to coordinate economic activity. (ANU 1998, 377)

Concerns of the kind expressed by Keynes do not arise within microeconomics per se but over the implications of "the consistent and repeated application" of its principles to the whole of economic life and now, indeed, social life. Some of its applications are grounds for

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bemusement: the continuing fascination with general equilibrium theory, venerated as one of the discipline's greatest intellectual achievements, even though it is conceded that its image of the perfect competitive market cannot be related to the working of any actual economy; or a concept of welfare based on the idea of Pareto optimality, a situation (resulting from perfect competition) in which no reallocation of resources could make any individual better off without making at least one individual worse off—a conception in which questions of redistribution are excluded by definition. It is not surprising that critics discern in neoclassical economics an idealization of the market that predisposes its adherents to neoliberalism (Groenewegen and McFarlane 1990, 232235; Ormerod 1994, 38-66; Keita 1992, 83-121). The universalism—the lack of concern for the particular culture, traditions, and institutions in each society—is most striking with respect to the Washington consensus on economic development, but the same pattern recurs whether in the former communist world or in the West itself. Whatever the particular character of a country's economic problems and whatever its particular strengths and weaknesses, the remedy is the same. It is envisaged in purely economic terms, and it is assumed that the rest of the society's institutions will fall into line, however much this might go against the grain of its historical experience. Thus, to take the Australian example, by the 1980s it was evident that certain radical changes had become necessary. The market for its traditional exports was in decline, and its high protective tariffs, sheltering increasingly inefficient industries, were out of line with the worldwide trend to greater liberalization. The specific problems were quite different from those that brought the turn to neoliberalism elsewhere, for example, in Britain. Yet there was no sense of building on the society's traditional values and achievements but rather a wholesale condemnation of the previous "statist" approach, even though the state's share in the overall economy was surprisingly low in comparative OECD terms. With some few exceptions noted earlier, there was an uncritical espousal of the whole neoliberal agenda. Along with the disregard for the particular there is obliviousness to the significance of history. No longer deemed important in training economists, history is viewed in one-dimensional terms, as a catalog of errors (the misguided protectionist past) or as a narrative leading unproblematically to the enlightened present. That history might be a dialectical process marked by discontinuities, or that previous attempts to construct a liberal order in a heterogeneous world generated intolera-

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ble tensions, or that drawing lessons from historical experience is beset with problems—such thoughts do not present themselves. Other issues are raised by students of long-term historical change, demography, and the environment: while standard economics may be adequate in relation to short-term problems, it bypasses central long-term issues, for example, "how to achieve a balance between population increase, economic growth and the dwindling stock of unpolluted natural resources, without economic and social collapse" (Snooks 1993, 1). While some economists take environmental issues seriously, the neoliberal public discourse does nothing to dispel the polemical dichotomy—ecological sensitivities versus growth and jobs. The normative ambivalence of the discipline has been touched on above. Australian economist Richard Blandy, while defending economics against its critics, concedes that the discipline is deficient in relation to normative issues: Modern e c o n o m i c s too often appears to have an empty heart. Economics is a very powerful intellectual framework for organizing options, but its values are not made sufficiently conscious to economists and, therefore, clear to non-economists.. . . Our best economists are magnificent, technically, but to what purpose? There has to be more consciousness in economics about what its moral heart is. There is such a moral heart. It is the empowerment of ordinary people in their ordinary lives and the reduction and dispersal of concentrations of power. This moral heart is exactly what "statists" do not like. (Blandy 1992, 105)

This expresses a commitment similar to Friedman's and Hayek's. But it does more than signal a libertarian social philosophy on the author's part: it identifies economics with that philosophy. In reaffirming the classical liberal dichotomy between individual and state and allowing for only one form of oppressive power, it disregards more than a century of social and political thought. The suspicion that this kind of unstated philosophy drives the neoliberal agenda—"social philosophy masquerading as economic science"—explains the vehemence of much of the opposition to it. It would seem that despite fairly general endorsement of a distinction between discipline and social philosophy, in practice, as the survey of Australian economists noted above suggests, the economics profession is ambivalent on this issue. There is a disciplinary bias toward an individualist philosophy, along with a general presumption in favor of

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market mechanisms and hostility to state intervention in the economy— a way of conceptualizing the economics-politics nexus whose familiarity does not render it any less problematic. It is a relatively short step from a disciplinary consensus in favor of liberalization and freeing up market forces to a preference for small government and a questioning of the welfare state and income redistribution. Social liberals who favor a substantial public sector have to argue against the grain of the discipline, rather as the original social liberals had difficulty persuading classical liberals that the state could be a force for enriching and empowering individuals, not just an oppressive power against which their rights and freedoms needed to be protected. A second reason for the disciplinary bias toward a libertarian philosophy may be its commitment to methodological individualism: "the doctrine that all social phenomena—their structure and their change— are in principle explicable in ways that only involve individuals—their properties, their goals, their beliefs and their actions" (Elster 1985, 5). Economic behavior, and for some economists all human behavior, is explained in terms of individual preferences, individual choices, individuals maximizing their utility. 19 This microeconomic approach to explaining social phenomena, which screens out norms, culture, institutions, power structures, and the like, is frequently found associated with "ontological individualism": the essential reason for giving priority to individuals in such explanation is the assumption that they alone are "real," while institutions and social structures are no more than constructs of the mind—"fictions" (Lukes 1973, 123-124, commenting on Hayek and Popper). Social institutions are nothing more than aggregates of individuals; "there is no such thing as society." And both of these also have an affinity with normative individualism, according to which individual (negative) freedom is the highest good and individual preferences are the crucial criterion for evaluating policies and institutions.20 Historically, the various individualisms were closely associated with one another, and although they are logically separate, the ascendancy of microeconomics restores a situation where the discipline's assumption of methodological individualism creates a presumption in favor of normative individualism. The one-dimensional economic mind-set, then, historically blind and normatively obtuse—"magnificent technically, but to what purpose?"—has no way of addressing the more fundamental issues raised by the construction of social and political order at the present time: issues relating to development, employment, equity, and sustainability.

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The dominance of the public discourse by a profession subject to the educational formation and disciplinary constraints of contemporary economics creates an intellectual malaise with far-reaching cultural implications. Economics and Power Those economists who are in a position to participate in the restructuring of world order are remote from these concerns. For them the answers to policy questions are simple and universal. Through the prescriptions of the Washington consensus, the orthodox remedies of hard liberalism, the world is to be brought into as close as possible an approximation to the perfect market. The most effective way of minimizing the harmful effect of government intervention in the market is to reduce its power to intervene. (The actual size of government in the economy is irrelevant; it is always good to reduce it.) In taking this stand, economists in positions of power are allying themselves with the ascendant transnational elites, and they become part of the governing transnational coalition, providing it with a policy doctrine and rationale. In doing so they serve several functions. First, they enhance the coalition's solidarity and sense of virtue by providing authoritative support for its members' long-standing views and preferences. They provide a lingua franca that is constantly reproduced in official pronouncements and in the media. Second, they articulate a policy agenda capable of limitless extension. There will always be new imperfections in the market and new impediments to competition to be addressed. The provisions of the World Trade Organization, for example, are far more comprehensive and have far greater implications for domestic economic organization than the rules previously agreed to in the GATT negotiations. With these preoccupations at the top of the agenda, issues such as structural unemployment or poverty and deprivation are relegated to an uncertain future. And the remodeling of governmental and public institutions along market-oriented lines opens up a whole new area for the application of economic criteria. Thus the adherents of neoliberalism maintain the policy initiative; sceptics and adversaries are thrown off balance and on to the defensive. Third and most important, economists confer legitimacy on the emerging order through the unique aura of science that lends authority to their policy recommendations, while other participants in the debate can be dismissed as partisan or lacking in expertise. 21 The claim there is

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no alternative to orthodox neoliberal policies—that they are necessitated by globalization, competitiveness, technological change, or whatever—would lack credibility if it were not backed by the authority of the empowered expert and the mystique of science. As in the nineteenth century, the diversity of views within the discipline is politically irrelevant; what counts is the unison among the authoritative voices in the public arena. To the legitimacy conferred by necessity is added the legitimacy of virtue and even, in some contexts, choice. Contradictory claims, a serious weakness in a theory, can be a source of strength in an ideology, appealing to different moods or different constituencies. Thus the policies exhibit the virtues of discipline and restraint. The selectiveness of who is to be disciplined and restrained remains shrouded in silence, since some of those who preach discipline and restraint for others require for themselves the incentive of ever-higher salaries in order that the economy may remain competitive. For the initiated, and occasionally for the public, there is the extolling of that single neoliberal value, "freedom," understood as freedom from state regulation and freedom for the consumer but not the positive freedom envisaged by Green and the social liberals. The public rhetoric that legitimizes the hard liberalism of the elites shows remarkable resemblances to the rhetoric by which realist theory legitimizes the harsher practices of international politics. There is the same appeal to necessity, the same depiction of harsh realities, the same rhetoric of policy imperatives that extinguishes the perception of normative choice. The demands of national security or economic efficiency take over, and debate is limited to the choice of policy instruments. Over time, however, persistent criticism of this realist rhetoric within the international relations discipline has gone a long way toward discrediting it. The subjectivity of perceptions of the national interest is widely recognized and thus the contestability of policies deemed to promote it. The national interest may remain a valid normative concept, but the inherent uncertainty over the consequences of policy choices that seek to promote it is acknowledged. This minimal self-awareness is absent in the neoliberal public discourse. There are several paradoxical features of the power exercised by the economics profession. 22 Economists are often criticized for neglecting the element of power in market relationships, in particular for their blind spot in relation to structural power, the political relationships within which markets operate, and the pattern of unequal rewards open

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to different actors.23 Yet this neglect of power, which economics shares with liberalism, may, as Galbraith suggests, render economics especially suited to the legitimitizing of power structures (1973). An ideology that disguises power may be more effective than one offering an explicit rationale. The doctrine of the self-regulating, competitive market renders power invisible, thereby shielding and strengthening it (Samuels 1992, 298). This does not imply a conscious attempt to disguise or deceive, but "the denial of any trace of political power in the orchestration mechanism of society—its price system" (Heilbroner 1990: 109) is something of an ideological tour de force. Economics neglects power, yet a section of the economics profession has proved adept at occupying positions of power, nationally and internationally, and at exploiting the power resources that accreditation in the economics discipline confers on the profession. 24 The economists in positions of power are overwhelmingly of the hard liberal persuasion, thus the potential for debating the options the discipline identifies is blocked by the monologue that constitutes the public discourse. The reasons for the dominance of hard liberalism among policy economists and commentators have not been much discussed, but several may be suggested. It is a doctrine that strengthens the hand of economists in treasuries and finance departments, whose task is to restrain expenditure and to improve efficiencies and financial discipline, and of their counterparts in institutions such as the IMF and the OECD. The dominance of hard liberalism may also be a consequence of the nature of the policy debates in the 1970s and 1980s, when liberal economists had to struggle to overcome deeply entrenched attitudes and practices, especially where, as in Australia, Keynesianism reinforced longstanding statist traditions. This tended to polarize debate between those most convinced of the free-market case, thus tending to the neoliberal extreme, and Keynesian and statist opponents of the turn to liberal economics. In the case of the United States, as we have seen, the Washington consensus was influenced by the ideology of the Reagan administration. More generally, it is likely that the prominence accorded to neoliberal commentators, like the new emphasis in the media on the daily comments of business and financial economists, owes a good deal to the congruence of their views with those of the ascendant corporate and financial elites. The social liberals among economists suffer from two handicaps that also promote the policy ascendancy of the hard liberals. First is the disciplinary bias in favor of markets and against government. The gen-

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eral mission of the profession is to promote free markets, to liberalize, to eliminate market distortions. Trade unions, for example, are perceived as overpowerful and as little more than obstacles to liberal reforms (Anderson and Blandy 1993, 485, 491). There is no cognizance of their role in establishing a certain countervailing power in an increasingly hierarchical economic system. While it is acknowledged that there can be market failures, there is a general expectation that there will be government failure. The discipline's assessment of the general tendency of neoliberal policies being broadly positive, it is difficult to win strong support within it for social-liberal alternatives. Moreover, if these alternatives tend to give weight to particularistic, institutional, or normative considerations, the very features that make them persuasive to noneconomists work against them in the economics profession. A second handicap for social liberals is the discipline's blind spot with respect to power. The role of power in the market or the political consequences of a radical change in the relative weight of government vis-à-vis corporate and financial actors do not fall within the purview of the discipline. The latter may be tacitly welcomed by hard liberals, who may indeed have a keen sense of the unspoken power struggles, but these considerations do not enter into the explicit policy discourse. In effect, social-liberal economists had little option but to acquiesce in the undermining of two of the pillars of support for the previous socialliberal order: a self-confident trade union movement and public sector. A further reason for the reticence of social liberals vis-à-vis the neoliberal agenda may be found in the role that economics and the economics profession is coming to perform in contemporary Western societies. The image of a secular religion and that of the profession as a secular priesthood are indeed apposite. A Seculdr

Religion

Initiates into the discipline acquire the mastery of a certain language that, like any language, shapes the way they perceive the world. In contrast to the other social sciences, whose concepts are contested and where learning the language requires critical engagement with theoretical debates and knowledge of different paradigms, contemporary students of economics do not engage in the critical discussion of living intellectual traditions but are instructed in a single paradigm—neoclas-

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sical economics—which is presented essentially as normal science in Thomas Kuhn's sense (1970, 10-34). Thus the world comes to be seen in terms of certain abstract categories: parsimonious order is imposed on untidy complexity and the "economy," thus conceptualized as largely self-regulating, can be "managed," to the limited extent necessary, by central bankers and financial authorities—provided only that political leaders do not interfere. Accreditation into the discipline is a condition for participation in managing the economy or for making authoritative pronouncements. In a democracy others are free to comment, but their command of the language is imperfect; the priesthood must correct them, gently or dismissively, but it does not debate with those who lack the necessary competence or with those who, though familiar with the language, have been led astray by false prophets. Among the initiated there is limited debate over the choice of policy instruments, tactics, and timing, but the basic features of the healthy economy are well known to the priesthood. The ensuing discourse may appear overtechnical or mechanical to the outsider but is in accord with the scientific status of the discipline. The underlying faith shines through in certain contexts—in the fervor with which free trade is espoused or protectionists and rent-seekers are denounced or occasionally, as in the case of the Friedmans, an individualist philosophy is articulated. A striking expression of faith in the global market was expressed by an Australian economist commenting on views expressed by a former prime minister, Malcolm Fraser. He interpreted Fraser's criticism of the unregulated market as a concern that "power has shifted from political agents to individual actors," but in reality the opening up of the economy "has given the next generation of Australians access to life opportunities." "Self-anointed leaders" cannot know enough to resolve the many evolving problems; their interventions only create new difficulties. The problems will, however, be resolved by "the decentralized decisions of millions of buyers and sellers" (Kasper 1998). The characterization of democratically elected members of a government as self-anointed leaders provides a telling illustration of the neoliberals' downgrading of politics. The incongruous association of abstract economics with quasi-religious, apocalyptic claims couched in dichotomies has been a recurring feature of public economic debates, in which the angels are always on the side of the liberalizers. For the British liberal leader Henry Campbell-Bannerman in 1904,

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We stand today at the parting of the ways. One road . . . leads to Protection, to conscription, to the reducing of free institutions to a mere name . . . And the other road leads to the consolidation of liberty and the development of equity at home, and to treaties of arbitration and amity . . . and the lightening of taxation, which presses upon our trade and grinds the faces of the poor. (Trentmann 1998, 228) In the Australian economic debate of the 1980s the imagery was more homely, yet supercharged with emotion. Treasurer Paul Keating was characterized in verse as an "elegant apostle of necessity," an ardent supporter of a utopia that "no philosopher could argue with" (John Forbes, quoted in Morris 1992, 18). One author's perception of the media portrayal of Keating's role is captured in her title, Ecstasy and Economics (Morris, 1992). In such a context the social-liberal economist, torn between competing social values and the veneration of the market that shines through the discipline's texts, is at a disadvantage in relation to the neoliberal true believer. The discipline not only provides a common language but instills a sense of a common mission: to improve society by promoting all those efficiencies that in principle can make all better off, which it is assumed can be best achieved by giving free play to market forces. 25 Only economists have this shared understanding—a powerful bond that reinforces the "tribal" feeling common to all disciplines but especially well developed in economics. It is accentuated by the organizational separation of the teaching of economics from the other social sciences, let alone the humanities. In other academic faculties there is a sense that "warring gods" are hovering in the background even when they are not actually present; economics is monotheistic. It is instructive to compare neoliberal economics with that other great secular religion of the twentieth century, marxism. They share a preoccupation with economic structures and a bias toward economic determinism. Both are universalist faiths, the one prepared to override the individual, the other based on individualism yet curiously indifferent to the concerns of actual individuals. Both are Enlightenment faiths, confident in their rationality and contemptuous of nonbelievers. Both rest on parsimonious images of society. In the 1990s one stands discredited by historical experience, the other had been similarly discredited for several decades after the 1930s. The question whether its late-twentieth-century revival will prove more lasting than its previous incarnation remains open. The differences are also instructive. Whereas communism sought to

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replace capitalist structures with entirely new property and power relationships, neoliberal economics accentuates certain features of those structures and works with their elites, rationalizing and reinforcing their power and privilege. And whereas communism sought to refashion a new "Soviet man," neoliberalism works with what it perceives as selfregarding human nature. In practice, however, its abstraction from the complexities of actual human nature commits it to promoting substantial changes in human values. The perfecting of the economic system requires a degree of commercialization, competitiveness, and egoism that will bring actual persons into closer approximation to "economic man." 26 Even in Western societies with their prior cultural development, this may present a major obstacle to the consolidation of a neoliberal order. And non-Western cultures may prove an insuperable barrier.

CONCLUSION The discussion has identified three sources of support for neoliberalism. First, the changes associated with globalization have greatly strengthened the position of corporate and financial elites and their associates. They can be seen as a transnational coalition whose members share a common outlook and exercise a powerful influence on governments of all persuasions. However, the reliance on liberalism to legitimize a highly inegalitarian order exposes normative tensions that could render this form of elite rule precarious. Second is the role of the United States. So long as it has no geopolitical rival, it can exercise power by its preferred means, economic and cultural. Reflecting the society's deeply embedded pragmatic but essentially classical-liberal political culture, U.S. governments played the key role in the global shift to neoliberalism and remain committed to keeping the global economic order within its parameters. Third is the role of an intellectual elite drawn from the economics profession, who formulate the ideology and constantly expand the scope of the neoliberal agenda. Despite dissenting voices within the discipline, an economic orthodoxy claims the authority of science to legitimize an order that not only enhances inequality but acquiesces in the persistence of mass deprivation. At best it offers a narrow foundation for legitimacy. Nonetheless, the forces sustaining neoliberalism are formidable. It remains to examine the potential support for an alternative.

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NOTES 1. Originating with Robert Cox, this approach has been developed inter alia by Stephen Gill and Craig Murphy. For a discussion of the relevance of Gramsci's thought to international relations, see Cox (1983), reprinted in Gill (1993), a collection of papers developing the Gramscian approach. For a critical discussion see Germain and Kenny (1998) and commentaries by Murphy (1998) and Rupert (1998). 2. Cox postulates two types of state, the "welfare-nationalist" state, internally oriented, in which the tripartite bargain might be relatively stable, and the "neoliberal" state that is concerned first and foremost with maintaining its viability in the liberal international order (1987, 164-189, 219-230). In the latter an upper tier of corporate management involving only business elites and governmental agencies—those that "act as links between the world economy and the national economy" (228)—becomes more significant than tripartite corporatism. Actual states conformed increasingly to the latter type; in practice the logic of the welfare-nationalist type was never fully realized. 3. A well-known example of the former was Rupert Murdoch's circumventing the power of the U.K. print unions by moving from Fleet Street to a new plant in Wapping, which employed nonunion labor to operate new technologies. 4. A case in point is provided by widespread changes in education in the current period. The advance of the business/consumer culture is evident in the rapid expansion of business schools and the contraction of the humanities and sciences. There has been a decline in the status and relative salary of schoolteachers, reflected inter alia in the withdrawal of men from teaching as a career. Neoliberal policy in Australia goes further. Public schools are rendered less attractive by restricting resources such that parents are required to make "voluntary" payments for services formerly funded by state revenues. Under the Liberal-National Coalition government, incentives to transfer to private schools were increased, both by higher subsidies to those schools and by financial penalties for public schools when pupils transferred. In this way the promotion of individual "choice" placed the quality of education available in the public system, and thus to the society at large, under increasing stress. 5. The economic dimension of democracy promotion, and the way in which the U.S. government, business, and even the trade union movement became involved in the internal politics of a variety of countries, especially in Latin America and Eastern Europe, are discussed in Burbach (1993). For detailed case studies of the Philippines, Chile, Nicaragua, and Haiti, see Robinson (1996). 6. See, for example, Stein (1985); Russett (1985); Kennedy (1988, 514— 535). For a more recent perspective in which American hegemony is axiomatic, see Ikenberry (1999). 7. This is to view the matter in terms of traditional military security. For those who advocate a broader concept of security, including societal, environmental, and personal security, America's role, and its emphasis on the military

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and playing down other conceptions of security, may represent part of the problem rather than the solution. 8. The central geopolitical issue at the present time is whether Russia and China will continue striving to become part of this system or will at some point seek to improve their position through the threat or use of force. This would bring back nuclear concerns of the Cold War type but, short of threatening total devastation, it is difficult to see that either power will be in a position to mount a systemic challenge for many years. For further discussion of contemporary geopolitical issues, see Richardson (1993 and 1997a); the contemporary liberal security order is examined in Deudney and Ikenberry (1999). 9. In the early nineteenth century Russia and France were ahead of Britain in GNP, in 1913 Russia and Germany were (Mann 1993, 262). For a critical discussion of the analogy between nineteenth-century British and post1945 American hegemony, see Nye (1990,49-68). 10. As Ruggie and others have emphasized, the postwar regime was not one of complete free trade. Its minimal objective was to prevent a return to rival closed blocs, and so far as the United States was concerned, the crucial elements were multilateralism and nondiscrimination. Their acceptance "reflected the extraordinary power and perseverance of the United States" (Ruggie 1982, 397). See also Lipson (1982). 11. For structural power, see Strange (1988), who characterizes it as the capacity "to change the range of choices open to others, without apparently putting pressure on them . . . to make one choice rather than others" (1988, 31). For her account of the structural power of the United States, see Strange (1987). 12. See, for example, Saul (1997) and Richardson (1997b). 13. Nonetheless, it was not until the 1970s that neoliberal economic thinking in the United States came to the fore. In contrast to the U.K., where the think tanks remained very small, massive resources were made available to their American counterparts and for "pro-business" political campaigns (Peschek 1987; Dreier 1982). 14. Rather similarly, Joseph Stiglitz concedes an inability to remedy the plight of those living "in desperate poverty": "But we have no prescription, no formula with which to go to those who remain among the poor, which gives them even a reasonable hope of success" (1991, 140). This is in striking contrast to the confidence with which the Washington consensus was propounded, at least in its early phase. Among the most prominent economist critics of neoliberal development orthodoxies is Dani Rodrik (1997 and 1999). For a theoretical critique, some of whose arguments run parallel to those of the present section, see Brohman (1995). 15. For example, economics is introduced to students at the Australian National University as "the science of rational decision-making about economic choices and behaviour, and the effective use of scarce resources" (ANU 1998, 349). 16. Frequent reference is made here to this debate, which addressed some

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major concerns of the present study, including contending liberal views and the role of latent normative premises in economic policy analysis. 17. Nonetheless, a survey of Australian economics professors in 1992 suggests that there is greater agreement on the tenets of hard liberalism, in particular deregulation of the labor market, hostility to trade unions, and high levels of support for privatization. They were divided over small government (half favoring reduced government spending, one-third disagreeing), and while most saw income redistribution as a legitimate task for government, only half supported more equal distribution—and then subject to qualifications. The survey registered little concern over unemployment; this may be attributed to the questions asked, but it also throws an interesting light on the attitudes of the profession in the early 1990s. The authors of the survey note the high level of consensus on the primarily neoliberal agenda of the day (Anderson and Blandy 1993). There is an articulate minority, but the majority of the senior academics endorse most of the neoliberal orthodoxies. It seems likely that the level of uniformity in the discipline is higher in Australia than in most Western countries. 18. A complementary and more comprehensive summation is offered by Warren Samuels: Neoclassicism has also had a variety of technical meanings as to its central problem: the mechanics of utility, price determination or operation of the price mechanism, the working of the free enterprise system, the operation of pure markets, the mechanics of the pure theory or logic of choice, constrained maximization decision making, the allocation of resources, and so on. Not all these meanings are mutually exclusive; indeed, many of them are mutually reinforcing. My own general view is that neoclassical economics comprises work in the tradition of Marshall, Walras, and others on how the price mechanism of the market allocates resources in a context of the mechanics of choice from within opportunity sets. (1990, 3) 19. The commitment to methodological individualism is not always explicit, as in von Mises and Hayek, for example, but is implicit in the entities through which economic behavior is explained. For a comprehensive argument that neoclassical economics seeks to provide a methodological individualist explanation of all economic behavior, see Boland (1982). For Mark Blaug, who notes that macroeconomic phenomena cannot at present be explained in these terms, methodological individualism is a heuristic principle and an ideal (1980, 50). 20. The debate in social and political theory now tends to bypass the controversy between methodological individualism and holism or collectivism, which came to the fore in the early Cold War liberal opposition to socialism. For more recent approaches see Giddens (1984) on "structuration," or Bohman (1991, 146-185) for a discussion of macro-micro linkages (linkages now replace the earlier dichotomies). In this context economic theory's commitment to methodological individualism appears anachronistic or at best a theory of one aspect of social life that necessarily requires to be complemented (how are

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its many "givens" to be explained?). Thus, contrary to Becker (1976), the economic approach cannot provide a comprehensive explanation of human behavior in general, though it may offer some novel insights; it needs to be complemented from other disciplines, as indeed some leading economists acknowledge (e.g., Malinvaud 1991, 68; Pencavel 1991, 85). 21. Insight into the views of the Australian economics profession on the "level of economic understanding" of various social groups is provided in the survey by Anderson and Blandy (1993, 495^496). The Reserve Bank and the federal economic departments (Treasury and Finance) were rated "good"; the Commonwealth public service and the business community "adequate" (just short of good); trade unions and federal politicians adequate; the media and the general public inadequate; and environmentalists, the churches and sociologists—among whom were some of the most vigorous critics of the neoliberal agenda on normative grounds—"very ill-informed." The authors comment that "the predominance of economic incompetency cannot but hinder the chances of this country making wise decisions for the future" (1993, 496)—a neat illustration of the profession's closed mind toward the normative concerns of its critics. 22. It is sometimes objected that in reality economists have little power because governments frequently disregard their professional advice, for example, with respect to protection or the maintenance of inefficient regulations. Even in this sense of power—the ability to prevail in policy choices—the overall movement in favor of liberalization and deregulation shows that the economists' preferred policies have been adopted more often than not. But it is mainly other senses of power that are referred to above: power to shape the agenda and even the language of policy, and the authority to confer or withhold legitimacy on norms and practices. It is also pointed out that economics is losing ground to more "practical" subjects—business studies, commerce, accounting—in the number of students it attracts; however, this has no bearing on its authority in the public discourse. Authority is accorded to "economists," irrespective of whether they specialize in economics or a cognate subject. Another kind of indication is provided by the recruitment of professional staff in international institutions. In the World Bank in 1991, for example, there were 252 whose highest degree was in economics, as against 26 in management and related subjects and 17 in politics and administration (Stern and Ferreira 1997, 586). 23. Randall Bartlett (1989) offers a major attempt to remedy the gap, addressing "questions normally asked by institutionalists and Marxists using the tools of neoclassical economics" (198). 24. The increasing proportion of economists in senior bureaucratic positions is frequently commented on, for example, in the Australian case by Groenewegen and McFarlane (1990, 175-176) and Pusey (1991, 59-64, 78, 132). In the case of the World Bank, there is not the balance of disciplines that development studies suggest is desirable but a preponderance of economists. See, for example, de Vries (1996, 74-75) and Stern and Ferreira (1997, 586). 25. The economist's ideal, "Pareto" improvement in welfare, as noted earlier, is the change that leaves some better off and none worse off. Since it is

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acknowledged that in practice some are likely to be disadvantaged by any change, they can be compensated such that the condition (none worse off) is met. In practice this is often not done; it is either unnecessary because the losses are marginal, or else it is too difficult. For example, many of those who lose their employment through the removal of tariffs do not receive equivalent compensation. Yet the fictional Pareto account of welfare retains its hold in the discipline. 26. There are distinguished economist critics of economic man, notably Sen (1977) on "rational fools," but the ideology remains unaffected.

7 THE SEARCH FOR ALTERNATIVES: FORCES FOR CHANGE

The present chapter inquires whether and how, despite the formidable strength of the forces sustaining the attempt to construct an international order along neoliberal lines, the social-liberal alternative might nonetheless be effectively promoted. In other words, are there conditions that might favor the more radical strand in liberalism and social and political forces that might be mobilized on its behalf? The chapter begins by commenting on two prominent theoretical approaches within which forces for change have been conceptualized: those of Karl Polanyi and of the neo-Gramscian school. These, it is suggested, provide a valuable starting point but no more than that. It then seeks to identify forces that might counteract the three kinds of support for neoliberalism discussed in Chapter 6: the transnational coalition of elites, the power of a neoliberally inclined United States, and the new secular priesthood, the economics profession. Finally, to counter the perception that there is no viable alternative to neoliberalism, the concluding section draws attention to some reformulations of the social/ inclusive-liberal alternative that take account of contemporary conditions.

CONCEPTUALIZING FORCES FOR CHANGE Karl Polanyi

One of the seminal influences on thought about alternatives to the neoliberal order—Karl Polanyi's The Great Transformation, first pub-

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lished in 1944—offers a perspective on the nineteenth-century liberal order and its breakdown that remains highly relevant.1 For Polanyi the most radical and socially disruptive nineteenth-century innovation was not industrialization but the attempt to create a self-regulating market, to which society and government would be subordinated. The idea of the economy and the market constituting a separate sphere, as against society and government that would be constrained by the working of its laws, was new and was essentially a political and ideological project, one that might be tolerable in exceptional circumstances "such as existed in North America," but elsewhere, "the conflict between the market and the elementary requirements of an organized social life provided the century with its dynamics and produced the typical strains and stresses which ultimately destroyed that society" (1957, 249). Polanyi's image of this dynamic is the "double movement": first, the move by strong states to establish, coercively, the rules of the selfregulating market ("laissez faire was planned"); and second, spontaneous reactions by many diverse elements in society to protect themselves—their livelihood, their communal ties, their culture—from the ravages of unregulated market forces. He depicts two phases of this reaction. First, in the later nineteenth century there was the movement among the industrialized states not only to regulate the conditions of economic life but also to introduce wide-ranging social legislation—the collectivist or social-liberal trend discussed earlier. Second, in reaction to the attempt in the 1920s to restore the international liberal order based on the gold standard, there were the far more radical or violent reactions that accompanied the collapse of that order in the Great Depression—protectionism and the formation of trading blocs, fascism, and militarism. The last-mentioned went far beyond Polanyi's image of spontaneous self-protective reactions from society, yet the initial acceptance of fascism owed much to the disorder and destitution that accompanied the attempt to reconstruct the liberal order. From this point of view the current period can be seen as the next move to reconstruct the self-regulating market on a global scale and to subordinate all societies to its "laws." And a recurrence of the double movement is to be expected: that is to say, attempts from within societies to secure protection against the disruptive impact of unrestrained market forces. If so, the central world-order question is whether such social protection can be secured peacefully, through the normal working of existing political institutions, as in late-nineteenth-century Europe, or

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whether it can be achieved only through violence and the overthrow of political regimes, as in many countries in the 1930s. And as during that time, the return of internal violence and authoritarian rule would spell the end of those liberal expectations on which the projections of the obsolescence of major war are predicated. The present situation appears to resemble the interwar period more than the late nineteenth century, insofar as measures of self-protection against the unregulated market cannot be taken by governments acting independently but require a high degree of international collaboration, whether to maintain the system and manage its recurring crises or to reform it—tasks beyond the reach or even imagining of policymakers in the 1930s, which could be undertaken only in the aftermath of World War II. It is true that liberal democracies are far more securely established in the West than in the 1930s, as are welfare safety nets, albeit under stress, and support for extremist movements in the West remains limited. But the volatility of the international money markets in the late 1990s and the fragility of the financial system of so significant a country as Japan revived fears of system-wide financial or economic crises with unpredictable social costs and repercussions. Some authors have sought to find clues in Polanyi for identifying contemporary forces for change, that is to say, to discern the nature of the double movement at the present time. This may be asking too much: even in 1944 he left it to others to propose concrete reforms, and attempts to link his analysis to the role of today's radical social movements (as in Chin and Mittelman 1997) do not advance the discussion very far. More interesting, Robert Latham finds in Polanyi a normative commitment to "democratic provisionism," a view that not only maintains that economic institutions should serve social and cultural purposes but also asserts the importance of what Polanyi termed habitat, which can be taken to foreshadow environmental sustainability (Latham 1997). Polanyi is usually associated with the socialist, not the liberal tradition (Block and Somers 1984), yet his rejection of marxism and the "paramount importance" he ascribes to the classical liberal freedoms (1957, 254-258) suggest an affinity with social liberalism. Polanyi, then, anticipates today's concerns but should not be read for specific insights into forces and directions of change. His contribution is his diagnosis of the incompatibility between the dynamics of the self-regulating market and the conditions for maintaining a viable social

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order. This provides a framework for thinking about alternatives and enhances the sense of urgency. Unless there is as strong a resolve as that of Keynes and his generation to constrain the raw power of market forces in the interests of a broadly acceptable social philosophy, the stresses imposed by the unregulated global market are likely to provoke massive countermovements. Neoliberal ideology, by seeking to exclude such reforms from the agenda, exacerbates social tensions, making for confrontations with the disaffected and risking a 1930s-style systemic breakdown. The Neo-Gramscian Approach Scholars inspired by Gramsci's thought take the next step, identifying radical alternatives to the emerging order and the forces that might promote them. The basic Gramscian image of historical change, as we have seen, focuses on the idea of the historic bloc that seeks to secure its rule through hegemony rather than coercion—that is to say, primarily through consent achieved by controlling the institutions of civil society, distributing benefits widely and propounding an ideology that legitimizes the ensuing constellation of power. To the extent the disadvantaged can gain control over potential resources of power, they may seek to challenge the hegemonic order, but to do so effectively in a modern state with a well-developed civil society, they need to conduct a "war of position" in order to gain control of important institutions of that society in the name of a new ideology. In formulating such an ideology and in mobilizing a potential counterhegemonic coalition, "organic intellectuals" play a crucial role. Gramsci's conception of historical change affirms both structure and agency. Contemporary scholars, well aware of the problem of translating a theory originally formulated in the context of class conflict within particular states into the present global setting, employ these ideas heuristically. For Cox, as we have seen, it is by no means certain that the ascendant neoliberal forces can achieve a stable hegemony. He draws attention to structural tensions in the present political-economic order and to the potential for a counterhegemonic bloc, but only in general terms (Cox and Sinclair 1996, 309-311). A number of other authors suggest that the potential for a counterhegemonic coalition is to be found in the multiplicity of radical social movements working for goals that are marginalized by, or in direct opposition to, the priorities of

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neoliberal governments: community groups, indigenous peoples, women's groups, land reformers, environmental NGOs, labor and religious groups, and so forth. While most such groups are local, they are increasingly drawn into regional or global networks (Amoore et al. 1997, 188-189). For some this points to an optimistic assessment of their capacity to challenge the neoliberal pattern of globalization. But the weight of argument appears to be with those who hold that radical social movements are too diverse and fragmented, lacking the cohesion and command of resources to mount an effective challenge to neoliberal globalization—notwithstanding certain local successes and the fundamental social changes that some of them, the feminist movement in particular, have brought about.2 Neo-Gramscian analyses present two further problems. First, they are embedded in revolutionary socialist thought and are thus inclined to perceive the goal in terms that, in light of the experience of the exSoviet world, lack credibility: the overthrow of global capitalism. As noted earlier, this marks a crucial difference with liberalism but does not prevent liberals from drawing insights from the analysis.3 Second, while this flawed utopia remains in the background, the foreground is well depicted in the title of a recent symposium, "Globalisation and the Politics of Resistance" (Gills 1997). The focus of the contributions (several of them inspired by the Gramscian approach) is resistance to the present hegemonial order, not an alternative conception of the order that might be constructed. Perhaps for this reason, one of the theorists who has contributed most to the development of neo-Gramscian international relations theory, Stephen Gill, has moved a long way toward social liberalism in his thinking on alternatives to "disciplinary neoliberalism" (Gill 1998). In relation to Europe, he opposes "the arid financial vision" of the Maastricht agreement, looking to "an alternative form of state" that would be "more democratic, green and social" (1998, 18). He urges the left to formulate more concrete policies for both the short and the long term: for example, on the sustainability of the tax base, structural unemployment, the consequences of aging populations, the logic of our present lifestyles, and associated patterns of consumption (1998, 24). Just as there was formerly a great deal of overlap between the practical proposals of social liberals and social democrats, Gill's agenda suggests a similar convergence between a Gramscianism modified along reformist lines and current social-liberal approaches.

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CONTESTING THE FORCES SUSTAINING NEOLIBERALISM The Transnational Coalition Although the formation of a counterhegemonic coalition of radical social movements is not likely to prove sufficient to challenge the dominance of the neoliberal coalition, these movements could form part of a broader inclusive liberal coalition, to which they would bring a high level of political commitment. Even though their primary activity is not directed against the neoliberal order, the practices they are challenging find support within that order to a greater or lesser extent; thus for the radical movements neoliberalism may be regarded as an adversary at one remove. Supporters of the old social liberalism would constitute the larger fraction of a broad coalition, notwithstanding the loss of credibility of their former program. The task of those seeking to construct a counterhegemonic coalition would be to devise a program that could bring together the old social liberals and the new radicals. The question of devising an alternative to neoliberalism along these lines is taken up in the final section. The present one focuses on Western societies, since they occupy the dominant position in the international political-economic order. The obstacles to the formation of such a coalition should not be underestimated. Supporters of radical movements are loath to make the compromises that may be required for cooperation with established political parties, and in turn the radical agenda may alienate those parties' supporters. Some of the radicals see the adversary as capitalism, not neoliberalism, whereas for many liberals the central issues of contemporary politics revolve around variations within liberal capitalism.4 Shared values may provide a bridge between the two, but an intellectual barrier is likely to remain. What are some of the conditions that might favor such a coalition? What are its potential assets? Prima facie, given that the neoliberal coalition consists of relatively narrow elites, the greatest asset for social liberalism is the power of numbers: voters. This, however, is subject to the major qualification that the electorate has become ambivalent toward the social-liberal agenda. That is to say, although surveys frequently suggest there is majority support for effective social programs, sometimes even at higher cost, in practice electorates are averse to tax increases and to perceived inequities in the taxation system and may not trust governments to allocate increased revenue to the programs voters

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prefer. Moreover, to the extent that governments of social-liberal inclination are constrained to reduce costs for all the reasons noted earlier, their policies may be perceived as differing only marginally from those of their neoliberal counterparts. A second, more specific asset is the solid support for existing welfare systems, which represents an important obstacle to the full realization of the neoliberal program. Neoliberal governments, too, are subject to constraints and cannot avoid taking on some social-liberal coloring. There is a strong constituency for retaining the central programs of the social-liberal state, however much the interests of disadvantaged minorities may be at risk. Even so, the capacity of determined neoliberal governments to initiate long-term changes that tend to weaken this support should not be underestimated. 5 More generally, where welfare provisions can be presented as sectional privileges, they are vulnerable to political attack; paradoxically, inclusive liberalism may be politically divisive. The welfare constituency may provide secure support for social liberalism only where programs are popular and broadly based. A third element favoring social liberalism is the scope for variation in the level and nature of public provision. As we have seen, the more extreme hypotheses on globalization overstate the pressures for uniformity. The market tends to take existing programs as given (Garrett 1998); it does not punish the more high-spending welfare states unless their economies experience difficulties for other reasons, nor does it reward states with relatively low public-sector spending. It is even possible for a state to introduce a major new welfare program, such as the Australian Medicare, provided the overall economic policy setting does not create alarm. Fourth, some impending structural changes are likely to require a greater, not lesser degree of state regulatory capacity. The most obvious of these are in the environmental domain. A responsible policy approach to global warming is still some ways off, but it is difficult to suppose that the major governments will be able to defer indefinitely the kind of hard decisions that would never be taken by market actors alone. And there are more immediate problems relating to waste disposal, the conservation of scarce resources, and biodiversity, for example, that already involve considerable intergovernmental cooperation. It is a secondary issue whether and to what extent this complex of issues is better addressed by market mechanisms as against direct regulation. But there is a prima facie case that effective international measures may require more of the latter. For example, financial incentives and disin-

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centives may be an effective way of regulating pollution within a state's jurisdiction (though nonetheless requiring a strong capacity to monitor and to implement penalties), but the international trading of greenhouse emission rights may be little more than a means of permitting wealthy industrialized states to avoid internal adjustments, by taking advantage of unused "quotas" of states that for a variety of reasons are unable to reach the level of emissions assigned to them. Finally, a major potential asset of social liberalism in the longer run is its normative richness, in comparison with the ambivalence of neoliberalism—between the appeal to expertise or necessity on one hand, and the assertion of a narrowly defined individualism on the other. In a world in which political legitimacy has come to depend increasingly on democracy, however imperfect its actual institutions, neoliberalism's normative deficit is a major weakness and this in turn constitutes a standing invitation to social-liberal thinkers to address more vigorously the task of translating their values into practical policies capable of winning broad support. Nonetheless, despite these potential assets and the electoral success of the left in the 1990s, there remains a sense of a lack of alternatives to neoliberalism. As discussed below, in spite of attempts to define one, there is no generally recognized social-liberal position, globally or nationally. The obstacles to its revival are indeed formidable. To return to Cox's analysis, the postwar coalition between a powerful labor movement, interests favoring expansion of the state, and sections of the middle classes supportive of this general orientation were unable to secure a lasting hegemony and thus to forestall the return of unregulated finance, the disempowering of the labor movement, and the empowering of the market. The social-liberal coalition may have reflected an unusual constellation of forces in the development of modern liberal capitalism: the Western governments' response to the shared experiences of the Depression, war, and the communist threat. Short of such extreme pressures, the normal state of liberal capitalism may be one in which social groupings remain loosely organized and difficult to mobilize on behalf of any sustained program, while those elites best placed to steer the system in their own interests find political allies ready to accommodate them. If so, it is likely that social-liberal values will be voiced for their electoral appeal but, in the absence of a practical program, will remain at the level of aspiration. The drastic weakening and loss of confidence in the old social-liberal coalition and the inchoate nature of support for a successor, then,

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represent major obstacles to the revival of an effective social-liberal project. These tendencies are furthest advanced in the Anglo-Saxon neoliberal states and least in the continental democracies, but the forces of neoliberalism are pressing their agenda in the latter with no less determination. Whether for this or for other reasons, the governments of the left have singularly failed to devise any strategy for countering the power of transational capital. Nothing has been heard of the long-standing idea of the Tobin tax, a modest charge on all international currency movements intended to serve as a disincentive to speculation. Since this would require the agreement of all the significant financial centers, such an innovation would not be easy to implement. But it does not appear to disadvantage governments, and thus the silence on the issue is noteworthy. The absence of taxation on international financial transactions is a striking instance of the power of international financial interests. American

Preponderance

The second pillar of support for neoliberalism, it was suggested, is the preponderance of American power, the securing of which has been seen as the most fundamental goal of U.S. foreign policy since the onset of the Cold War (Leffler 1992). From this perspective American state officials, conscious of having at their disposal resources that far outweigh those of any potential rival, have consistently acted as classical realist theory would predict. Whether in the name of maintaining the balance of power, projecting Western values and norms, or constructing a liberal order, these officials have resolutely insisted on America's right to exercise this preponderant power—essentially, to reshape the world in the American image. Over the decades, U.S. officialdom has developed habits of leadership that have never been seriously questioned and are infrequently commented on. More surprising, despite the rhetoric of partnership, occasional disputes, and France's more frequent dissent, the other major Western states have consistently deferred to American leadership. A preponderance of power resources has been successfully translated into an accepted leadership role. Inevitably, this influence has been exercised in accordance with the values most deeply embedded in the American political culture, and as we have seen, this embodies the virtues and limitations of classical Lockean liberalism. While not excluding pragmatic concessions to social liberalism, the vision that inspires U.S. officialdom seeks to

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reproduce not so much the contemporary American reality as the idealized image of liberal America, in a world where states have a diminishing role as the removal of economic and financial barriers opens the way to the liberal Utopia. Those suffering acute deprivation enter into such a vision no more than the underclass whose presence in U.S. cities in no way disturbs the country's rulers. Among the manifestations of this influence have been the U.S. role in introducing the regime of unrestricted capital mobility, the promotion of the Washington consensus on economic management and development, and America's controlling position in the IMF and the World Bank, where the habits of deference appear to be particularly well entrenched. One of the few works that addresses the question of countering this pillar of support for neoliberalism in any detail is the study of globalization by German journalists Hans-Peter Martin and Harald Schumann (1997, 218-226, 235-240). In accordance with structural realist logic— only an equal power can restrain or challenge the hegemon—they see the formation of the European currency union, with a potential market of 400 million consumers creating an economic power equal to the United States, as a prerequisite for countering neoliberalism's global offensive. Assuming that the European Union was committed to social liberalism, it would have the economic and political weight to render its social model viable. It would be strong enough to determine the conditions for investment within the EU, rather than yielding to the preferences of the money markets. And although they do not pursue this aspect, the pragmatic U.S. government could be expected, as in 1945, to acquiesce in a reassertion of social priorities: embedded liberalism, the social-market economy, is preferable to a breakdown of the liberal economic order. Their crucial assumption is that a united Europe would have such a commitment to social-liberal values. Is this likely? It is true that the political cultures of most states in continental Europe are more deeply influenced by variants of social liberalism (social democracy and Christian-social philosophies) than the Anglo-Saxon democracies and that classical economic liberalism never gained a strong hold there. Neoliberalism, however, is now far more strongly promoted than social liberalism has ever been in the United States, not only in Britain but by well-placed elites throughout Europe. Traditional political culture is important over the long run, but there can be periods when policy is shaped by different values. Far from being a social-liberal bastion, the European Union is a major arena for the struggle between neo- and

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social liberalism. The provisions of the Maastricht agreement read as a neoliberal design for Europe (Gill 1998), and Martin and Schumann note that policy in the existing Brussels institutions is made by bureaucrats in consultation with corporate interests, with little input from other social groupings (1997, 220-221)—precisely Cox's neoliberal pattern. They place their hopes in a massive upsurge of democratic politics in the EU's decisionmaking processes, but like others who have lamented the EU's "democratic deficit," they are more convincing in drawing attention to the extent of unrepresentative, elitist decisionmaking than in showing how an infusion of democracy might be brought about. A second question raised by the idea of a European counterweight to the United States is whether the EU is likely to be sufficiently united and cohesive to play such a role. The outcome is as uncertain as the question of the social philosophy Europe may adopt, but the projected expansion in the number of members reduces the chances of cohesion. For some, the logic of the common currency requires the formation of central governmental institutions to formulate economic policy for the union as a whole. So momentous a constitutional development would, needless to say, be highly controversial. Short of this, others call for a harmonization of policies, for which the conditions required for membership of the common currency union provide a precedent; yet to some critics such conditions introduce rigidities that may make the system unworkable in the long run. Britain's place in Europe raises further divisive issues, both in terms of institutional structure and economic policy orientation.6 The problems likely to be experienced in the next phase of Europe's expansion and institutional development, then, place a question mark over the thesis of Europe as a social-liberal counterweight to the neoliberal United States. Moreover, these preoccupations will probably leave little room for Europe to address the needs of the globally disadvantaged. Whereas a social-liberal philosophy would accord their needs the highest priority, it is unlikely Europe's elites will focus on those most neglected in the neoliberal perception of globalization. Thus far we have followed the structural logic that sees the formation of a second economic power equal to the United States as a prerequisite for modifying the neoliberal global project. But is this necessarily correct? The United States was even more preponderant in the international economy in 1945, yet in the particular historical circumstances of the time it accepted the partial subordination of the market economy to social purposes, albeit in a way that looked to greater liberalization in

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the future. This kind of structural logic has proved unpersuasive in other contexts. For example, Robert Keohane has made a strong case against the claim of hegemonic stability theory that international cooperative regimes require the support of a hegemonic power.7 Similarly, it may be argued that normative changes within a regime do not necessarily require the support of a state actor as powerful as the supporter of the existing norms. Change might be brought about, for example, by a transnational coalition of governmental and nongovernmental actors committed to a different ideology. Favorable conditions would also be required, and unfortunately, the most plausible of these would be an economic crisis sufficiently serious to shake the hold of the neoliberal orthodoxy. The Asian financial crisis prompted some questioning of the orthodoxy in official circles, but not for long. Short of a far more serious international crisis, the development perhaps most likely to transform the psychological climate of world politics would be a major setback to the U.S. economy. The appeal of the American model in the 1990s owed much to spectacular economic success, in contrast to the sluggishness of the other major economies, so recently perceived as dangerous rivals. A serious setback, for which there was no lack of warning signals, would undermine the American model, just as economic stagnation following the collapse of the "bubble economy" discredited the Japanese model. Contextual developments of this kind may well be more significant than presumed structural prerequisites as conditions favoring normative change. The Economic Discourse

Before considering how the dominance of neoliberal economic discourse might be challenged, it may be instructive to observe how an earlier intellectual hegemony was challenged and eventually undermined. The perception of a lack of alternatives to neoliberalism had its parallel in the preceding period, when attempts to challenge the Keynesian mixed economy and welfare state similarly lacked credibility. The structural changes working against it did not automatically create the neoliberal ascendancy. This had to be constructed; elite coalitions had to be formed in various states, taking advantage of the favorable transnational environment, but the nature, extent, and timing of the transition to neoliberalism depended on the particular circumstances of each case. A constant factor in these developments, however,

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was the intellectual movement inspired by Hayek's uncompromising, hard-edged economic liberalism, which gained momentum over time. Hayek's identifying of social liberalism with totalitarianism may indeed have rested on a profound misreading of the twentieth-century experience, but it was deeply felt and serves to explain the strength of his commitment and that of some of his followers. Others were inspired by a more simplistic identification with the American classical liberal tradition or by libertarian philosophies. Whatever their motivation, the neoliberal organic intellectuals were notable for the dogged persistence with which they argued their case, both in general terms and in relation to specific issues, despite the lack of public resonance of their appeal in the early postwar decades (Cockett 1994). Their eventual success in the Anglo-Saxon world, and in influencing the agenda more generally, can be attributed partly to their success in exploiting specific weaknesses in certain economies and partly to the appeal of their general message to well-placed transnational elites. In Britain, for example, successive governments' ineffectiveness in relation to foreign exchange crises, inflation, sluggish growth, and trade union militancy (widely referred to as the "English sickness") opened the way to a government promising a radically different approach, and the neoliberals were at hand with a ready-made paradigm. 8 In the United States, where a similar but less acute economic malaise coincided with a rather more salient sense of a weakening of America's geopolitical position, the Reagan administration's neoliberal rhetoric was matched by a patchy and opportunistic implementation of the doctrine as it sought to rationalize its combination of tax reductions with increased military expenditure. 9 Arguably, in the supportive American political culture it is relatively easy for neoliberals to dominate the policy rhetoric but very difficult, given the pluralism of American institutions, to achieve anything approaching consistent neoliberal policies. In the Australian case, the specific weakness assailed by economic liberals was industry protection, which became increasingly untenable as the ensuing costs and inefficiencies weakened Australia's competitiveness, the market for traditional primary exports softened, and international pressures for liberalization increased. By the 1980s a longstanding, seemingly ineffectual critique of protection had become the new orthodoxy; here too the policy elite did not limit itself to remedying the specific weakness but sought to realize the whole neoliberal agenda. In each case, then, neoliberal policymakers can be seen as

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exploiting a failure in a specific policy area or areas to introduce a broad agenda of fundamental economic change, an agenda well understood within certain elite circles but not by the public at large. If the same line of thought is applied in the current context, despite its limited repercussions the East Asian financial crisis offers indications of how a specific policy emergency can be a catalyst for a change of paradigm. There was alarm that countries such as South Korea or Indonesia, which were following broadly orthodox policies and whose economic fundamentals were deemed to be sound, were plunged into economic crisis. Moreover for the first time, the IMF was subject to harsh criticism from within the economic policy elite—according to the critics, for deepening the crisis through its austerity measures when expansionist measures would have been appropriate. The Washington consensus appeared to be shattered; the focus shifted to Keynesiansounding expansion packages and there was talk of safety nets, though no commitment to find the necessary resources. It became acceptable to suggest that some measure of shielding from the vagaries of currency speculation might serve the interests of countries still in the process of developing robust market economies, though it was still unacceptable to question the merits of unrestricted capital mobility in general. Not surprisingly, the mind-set of those in controlling positions in the international economy was to make the minimal changes that might be required to perpetuate the system. A deeper crisis would be needed to prompt more radical change. One lesson from the success of the Hayekians is the importance of persistent argument. This alone is not sufficient, but without the intellectual preparation—the winning of support for a particular vision of the alternative—favorable circumstances are unlikely to lead to the replacement of an established doctrine. 10 There is a major difference, however, between the neoliberal challenge and that of its social-liberal adversaries. The former had the polemical advantages of simplicity and universalism: whatever the specific economic and social ailments, the remedy was the same. The apostles of change were a close-knit band with a common training and mind-set and a message that was appealing to well-placed elites. The social-liberal challenge to the new orthodoxy is diffuse, like its political constituency, drawn from varied intellectual traditions and by and large opposed to universalism and committed to the principle that solutions need to be tailored to particular circumstances. Such diversity, a source of intellectual richness, is disadvantageous in political debate.

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The economics profession has a unique place in the challenge to neoliberalism. Only economists—whose expert knowledge and technical skills enable them to address the issues in the same language as the neoliberal "authorities"—can critically examine policies in their own terms. The arguments of professional economists cannot be dismissed, like those of other critics of orthodoxy, as lacking in expertise. What they lack, however, is political appeal. So long as the contentions of social-liberally inclined economists are perceived as no more than a technical argument among experts, the incumbent elites can adopt the strategy of ignoring them.11 Politically, social-liberal economists need powerful allies, but there is no ready-made constituency for their views. The economists' contribution needs to be supplemented intellectually as well as politically. Some of the reasons have been touched on earlier. Much of the debate among economists focuses on policy instruments; it tends to be assumed that these are politically neutral, which is seldom the case, and that the goals of policy are agreed upon, when what may be needed is clarification of the tension among goals or of the appropriateness of favored instruments to the multiple goals. Shared biases within the discipline lead to the downplaying of noneconomic considerations. To the extent that the economic discourse dominates public policy, issues are acknowledged only insofar as they can be reformulated in the language of the contemporary economics discipline. There is a need, then, for a broader intellectual approach, both critical and constructive. One requirement is to counter the legitimizing function of the ideology. Some publicists, such as Saul (1997) and Ellis (1998), couch their normative critique in terms of polemic and irony. Others address more systematically the assumptions of virtue or necessity that underpin the ideology's legitimizing role (e.g., Boyer and Drache 1996). Until these claims are confronted explicitly and persistently in the public discourse, apologists for neoliberalism are able to avoid engaging with criticism simply by reaffirming them.12 Related to this is the need to demystify the secular religion, for example, through enhancing the competence of people in general to assess economic arguments. Many now acquire competence in assessing economic indicators that relate to their particular circumstances, yet they can be swayed by simplistic slogans and symbols relating to the economy as a whole. Social liberals have an interest in fostering such public competence. As a first step toward reorienting the public discourse, the normative assumptions behind economic analyses and proposals need to be

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made explicit. This general norm of social science has special force when important decisions are taken on grounds that purport to be solely matters of technical expertise but that necessarily presuppose value judgments. As we have seen, the point is conceded by most economists when the issue is actually raised, yet the policy discourse relies heavily on the perception of neutral expertise, or "science." Normative explicitness would make clear whose interests were being served or sacrificed, and which broader social values were being upheld or abandoned. Normative discussion, however, should go much further than bringing hidden principles into the open. The reassertion of the normative over the technical would entail a change in the political culture; leaders increasingly comfortable in the role of manager would be expected to serve as representatives of definite social values. Policies would be driven by social goals, not the supposed imperatives of the market. Needless to say, the economy imposes constraints on goals that can be pursued at any given time, but these should be subject to constant review, as should trade-offs among them. A perverse situation arises if the only actors in a position to influence economic developments constitute a narrow elite, while the great majority are comprehensively constrained. At a time when technology enables the economy to satisfy basic needs and to provide an unprecedented range of other desired goods for all, the way in which it is organized elevates a few to positions of untold wealth and power while imposing harsh personal and social penalties on others, all quite capriciously. A value-oriented liberalism could begin by seeking to determine what goals society might expect so bountiful an economic machine to serve, and how its various mechanisms might be regulated to those ends. Liberalism would thus recover the normative emphasis that characterized it for most of its history. Just as the original liberals insisted on the rights and freedoms of individuals against arbitrary powers of government, so would social liberals assert the equal rights and opportunities of individuals against the arbitrary power of the untamed market. The former were not so impressed by the power of absolutist monarchs as to refrain from challenging it; neither must social liberals assume that the power of market forces is beyond reform. A revival of a more radical liberalism along these lines, however, would confront a further, less evident obstacle: the role of the social sciences in the contemporary culture. The priority they accord to empirical research and the slighting of the normative—indeed, its demotion to the subjective expression of value judgments—serves as a subtle reinforce-

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ment of existing realities and power relationships. The nineteenth-century social liberals wrote in an intellectual environment that was more hospitable to normative concerns. Contemporaries need to confront explicitly the empiricist (or positivist) bias of the prevailing intellectual culture. Once again, the easy part of this agenda is to expose the normative assumptions and silences that underlie particular arguments. Far more demanding is the construction of normative projects, not simply as abstract principles but as they relate to salient contemporary social realities. Such endeavors are sometimes undertaken through collaboration between philosophers and social scientists (e.g., Braithwaite and Pettit 1990). Normative theorizing has seen a revival in international relations even though, as we have seen, it has had little impact on the mainstream of the discipline, at least in the United States. Economics is even more resistant to constructive normative theory, yet arguably it is here that it is most needed, given the influence of the economics profession at the present time. A rare exception among professional economists is the work of Amartya Sen,13 but for the most part, the exploration of normative economic ideas is left to authors with a background in economics but experience as commentators on public affairs, such as Hutton (1995) and Ormerod (1994). The normative deficit in contemporary social science has its counterpart in the political culture, with its uncritical attitude to scientific and technical expertise and its readiness to discount normative claims as merely standard political rhetoric or the special pleading of interested parties. This cynicism is doubtless often well founded, and indeed, the manipulative character of political discourse has never been so prominent as at the present time. The shallowness of contemporary political "debate" no doubt owes something to the medium-—television—in which it reaches the public, but this is a symptom rather than the cause of the malaise. The fashion for the slick image and the sound bite could not survive if viewers were offered an alternative: leaders who engaged in serious normative reasoning, for example, as a way of broadening the vision of what is acceptable and legitimate. This would also require a more assertive and critical democratic culture, a move beyond the elitism of Schumpeterian democracy, which so neatly complements the elitism of economic globalization. While a high degree of political activism on the part of the populace as a whole is unlikely, it is reasonable to seek ways electorates might become more competent and informed and genuine debate might be encouraged. In general, the pres-

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ent situation reflects a vicious circle in which a number of factors converge to perpetuate a low intensity democratic culture: the lack of perceived alternatives, the perception of economic issues as beyond the competence of the great majority, the preferences of media proprietors. But proprietors would accept lively political debate if it were clear this is what readers and viewers demanded and if there were a perception of significant choices to be made. It is conceivable, then, that a "virtuous circle" could replace the present cumulative causes militating against a more vital democratic culture. Arguably, the key to such a change is to be found in the perception of an alternative. The same, we saw earlier, is required for the formation of an effective coalition against neoliberalism. The next section turns to recent attempts to formulate an alternative.

CONSTRUCTING ALTERNATIVES The Third Way The most prominent attempts to update the social liberal vision cluster around the image of the third way, associated with the policy orientation of the Clinton administration and the government of Tony Blair. The policies are not entirely new; some were adopted earlier by parties of the left in Western Europe and Australia. Practice preceded doctrine. As Anthony Giddens expresses it: Theory lags behind practice. Bereft of the old certainties, governments claiming to represent the left are creating policy on the hoof. Theoretical flesh needs to be put on the skeleton of their policy-making—not just to endorse what they are doing, but to provide politics with a greater sense of direction and purpose. (1998, 2)

Giddens undertakes this task in The Third Way, defining a position that, he claims, "transcends both old-style social democracy and neoliberalism," adapted to a world "which has changed fundamentally in the past two or three decades" (1998, 26). Globalization has opened up societies as well as economies; the communications revolution has brought about a "transformation of time and space in our lives" (1998, 31). There have been fundamental changes in the nature of the family and the position of women; lifestyles have become far more diversified. Accelerating technological change is transforming not only the workplace but also

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the nature of work, undermining the norm of long-term, stable employment; the labor market is fragmented and differentiated. All this makes for a new individualism, not in the sense that individuals are more selfregarding, but that far more aspects of life are becoming matters of choice, no longer regulated by the norms of family, class, or tradition. " N e w " issues such as drugs and crime are high on the political agenda, along with " o l d " issues such as economic management and welfare and a long-suppressed issue, the environmental consequences of " o l d " industrialization. Third-way theorists see a need to rethink the role of the state, in particular the welfare state, not just because its tax base is under threat while the demands for its services are increasing, but also because it must meet new needs that require new kinds of response. These include "lifelong learning"—training programs to keep the workforce abreast of the constantly changing demands of the labor market and to prevent the long-term unemployed from becoming unemployable. They also include programs to promote the inclusion in the society of disadvantaged persons and groups whose special needs must be addressed if they are to have reasonable access to education and work. In other words, something more is required than the allocation of benefits to passive recipients. This is variously expressed as active or positive welfare, or Giddens's "social investment state," and there are suggestions that the old services should be redesigned along similar lines.14 The individual has responsibilities as well as rights—an idea that is less of a departure in social-democratic (and social-liberal) thinking than is claimed. Giddens's thinking on the "external" is much less developed than on the "internal": the reconstruction of the (Western) state. Indeed, it reads as little more than an afterthought. He discusses cosmopolitanism and multiculturalism in the internal context (1998, 133-138) and notes the extent to which everyday life in Western Europe is now regulated by the European Union, whereas "global governance" has lagged behind. He canvasses proposals for the regulation of financial markets, "the single most pressing issue in the world economy" (1998, 148-151), and for ways in which the absence of democracy in international institutions might be remedied. He suggests that institutional change—the democratizing of international institutions—is "a condition for effectively regulating the world economy, attacking global economic inequalities and controlling ecological risks" (1998, 147). In view of the extreme difficulty of achieving institutional reform, this is a troubling assertion, but the reasons for it are not spelled out.

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The Internet

We may now turn to a closer examination of the proposed alternative to neoliberalism, first in the internal context. The discussion focuses on three of the many potential sources: Tony Blair, the political leader most strongly identified with the third way; 15 Will Hutton, author of an influential critique of the practical consequences of Thatcherism; and an Australian, Mark Latham, for his comprehensive formulation of thirdway policies. Latham writes in a different political and institutional context from the others (Australia has not experienced the full-blooded neoliberalism of Thatcher's Britain), but his viewpoint is remarkably close to Giddens. Hutton's is somewhat different; his work thus serves to illustrate the range of variations among those seeking to update social liberalism. Third-way writers invoke the social-liberal tradition along with the social democratic. For Blair, it is the values espoused by the early ethical socialists that give substance to the notion of a community, and in words that echo T. H. Green, he affirms "the need for society to act together to achieve what the individual cannot do alone," and "the use of the power of society to protect and advance the individual" (Jones 1996, 135). Latham, invoking the theme of "mutuality," seeks to recast social democratic ideology such that it draws from the most attractive aspects of liberalism and socialism: liberal in the sense of selectively pursuing state powers for the creation of social and economic freedoms: socialist in the sense of wanting to foster a dense web of social responsibility and respect for the common good. (1998, 326)

Unemployment is recognized as posing the most urgent challenge—indeed, as the litmus test of the credibility of the social-liberal alternative. Hutton voices a shared theme: "the fulcrum around which the good society turns is an equitable distribution of work and income" (1997, 66). "Equitable" implies a rejection of the perceived American model. The deregulation of the labor market does not necessarily achieve high employment, and the improvement it does achieve may come at a high price: reduced living standards for those already impoverished, not only materially but in terms of opportunity for self and family. 16 The starting point is the familiar idea of the need for a highly trained, technically skilled workforce, capable of producing the highquality goods and services that can compete in the global marketplace,

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and for retraining programs (lifelong learning) such that the economy can cope with the onrush of technological change. The priority, as Blair is frequently quoted, is "education, education, education." But clearly this is not sufficient. Not all can have the skills sought by firms competing in the global market, and an increasing share of employment is in "in-person services" (Reich 1991). It is recognized that specific programs are required to address the needs of particular groups, such as the young with little or no work experience and the long-term unemployed. Here, it is argued, there may be a need for subsidies to employers to offer work to those who would otherwise be passed over (Hutton 1997, 77). The rationale for such programs is not to increase aggregate employment, which must be sought by other means (Latham 1998, 110), but to avoid the formation of a permanent underclass excluded from work and marginalized in society. Both Hutton and Latham pay particular attention to the regional concentration of unemployment, not only between different parts of the country but also between suburban clusters in large cities, that renders the problem of structural unemployment so intractable. The stimulation of the economy may create full employment and inflationary pressures in prosperous areas, while leaving disadvantaged areas little affected. Hutton looks to political devolution as a response to this problem: if genuine power and resources are transferred to the local level, elected community leaders will have every incentive to fund projects calculated to attract investment, breaking out of the vicious circle that otherwise leads to further stagnation (1997, 74-77). Latham proposes different measures, which take account of Australia's vast distances and sparse population. These include regional infrastructure programs aimed at increasing the productivity of local investment; the location of public sector services in disadvantaged areas; and public funding to support employment in community services that would strengthen the "social capital" and address some of the unmet needs of the disadvantaged (1998, 112-25). If unemployment is the most pressing immediate concern, the overriding long-term issue for social liberalism is the adaptation of the welfare state to the changing needs and circumstances noted earlier. There are major differences in the scope of welfare services and in institutional structures and practices across Western societies, but they are experiencing certain common problems. The aging of the population increases the cost of state-supported pensions and the demand for health services, which are also rendered more costly through technological change.

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Higher levels of education and training and special programs for the disadvantaged impose further costs, as do high levels of long-term unemployment, which were not envisaged in the original design of unemployment relief. The third way has no simple blueprint to set against the neoliberal drive to privatize as many of the services as possible. "Active welfare," "social investment," and "responsibility" are open to a range of interpretations. It envisages a mix of public and private provision and funding of services, maintaining that considerations of equity, social balance, and also efficiency require that public welfare programs be maintained and revitalized. Both Giddens and Latham offer radical suggestions that indicate the potential for achieving social goals through novel means. Giddens, while insisting on "an adequate level of stateprovided pension," would abolish age retirement and the right to a pension at any given age. The old would not be in a retirement ghetto but would be part of the normal society, linked to younger generations through their involvement in work and the community (1998, 118-121). Latham goes into greater detail in developing an ambitious conception of a system that would enhance the individual's social capabilities through the customized delivery of services for lifelong learning and income support. Instead of a multiplicity of separately administered schemes for which persons might seek to qualify, they would have a single social security account, into which they would pay contributions and from which they would be entitled to draw support in a range of circumstances. Modern technology makes it possible to administer such customized individual programs, allowing for different phases in the lifelong experience of employment, parental responsibilities, and aging (1998, 221-231). He applies the same logic to the problem of regional inequalities. Instead of uniform programs, administered centrally and making no allowance for regional circumstances, he puts forward a "place management model," where all the relevant services would be brought together and administered through regional offices cognizant of local conditions (1998, 214-220). His program would demand unusual personal qualities as well as a high level of professional skills on the part of administrators—but might not the information assembled on individuals raise the specter of the state as big brother in a new guise? Other aspects of the new thinking may be noted more briefly. "Big, centralized government is out. Devolution and decentralization are in" (Blair 1996, 259). This is not only a reaction against the extreme cen-

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tralization of power under the Thatcher government but against centralized administration more generally. Accountability is to be increased by bringing government close to the people and by fostering public-private collaboration at the local level. Latham argues along similar lines but with greater emphasis on the need for a sophisticated central administration capable of monitoring local variations. It is part of the third-way philosophy that the associations of civil society, valued in themselves for promoting a sense of community, should be involved in the delivery of services. There are formidable problems, however, in implementing the program, which lead to a slippage between theory and practice such that to many, and not only radical critics, it becomes difficult to distinguish the third way from the neoliberalism it opposes. Privileged elites are strongly placed to resist state initiatives; as Gill (1998) and others have pointed out, determined efforts have been made to lock in the neoliberal measures and institutions, such that their reversal becomes extremely difficult. If governments have surrendered many of their powers to the market, it is not easy to recover them. Fears of this kind are frequently expressed concerning the Blair government (Jones 1996, 154-157). Furthermore, it is difficult to establish firm political support for the new approach; third-way rhetoric alienates the old left, while the heterogeneous new middle remains ambivalent. Taxation presents a particular challenge to third-way governments. Hutton argues convincingly that repair of the welfare services most damaged by neoliberal cutbacks would require an increase in taxation that Britain, near the lower end of OECD comparisons in this respect, could well afford (1997, 83-84, 105-106). However, whether for electoral reasons or from conviction, Blair presented New Labour as a party of low taxation, severely constraining welfare improvements. Increased expenditure on the notoriously rundown National Health Service, for example, was delayed until, in the winter 1999-2000, public anger over its inability to cope with seasonal demands forced the government's hand. More generally, if social liberalism is claimed to be without cost to taxpayers, it is likely to remain at the level of aspiration and will soon lose credibility. It is ironic that parties of the right appear more willing to risk unpopular tax measures than the new reformists. 17 The case of taxation illustrates the apparent acceptance by thirdway leaders of important parts of the neoliberal agenda. A joint statement in June 1999 by Prime Minister Blair and German Chancellor

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Schroeder provides another example: proposing "the way forward for Europe's social democrats," it condemned the social democratic past more strongly than the neoliberal present. References to goals were perfunctory; the paper was dominated by the discussion of economic means (Frankfurter Rundschau, 10 June 1999, 18). The way to achieve social-democratic goals, it appeared, was to adopt neoliberal measures: the fostering of a new spirit of entrepreneurship and competitiveness, the reduction and rigorous scrutiny of the bureaucracy, and relief from the burden of excessive taxation. Six months later Blair was reported to be calling for abandonment of the welfare state of the 1960s and the adaptation of Europe's policies to the needs of the modern economy {Frankfurter Allegemeine Zeitung, 29 January 2000, 2). The problem with this approach is that muffling the presentation of the social-liberal alternative makes it easier for any successor neoliberal government to intensify the pursuit of its agenda. Internal tensions within the thinking of social liberals may also impede implementation of their program. There is tension between the institutional radicalism of proposals such as those of Giddens and Latham and the widely perceived need to repair existing social welfare institutions that still meet urgent needs. Political support may be more easily available for the latter, and pursuit of radical institutional change may perpetuate present inadequacies. Moreover, the agenda of repairing and restoring not only claims greater urgency but is essentially conservative. If such tensions paralyze reform, neoliberal measures may eventually be adopted, faute de mieux. In continental Europe, where social welfare institutions are more extensive than in the neoliberal countries, the conservative agenda of repairing and restoring may well have greater appeal than radical institutional restructuring. But in this case the new social liberalism would closely resemble the old, not mark a new departure. We may conclude that in the internal context third-way thinkers have devised an intellectually appealing approach to updating social liberalism in the light of far-reaching changes in Western societies. They highlight diversification and individual initiative and also provide for the inclusion of the disadvantaged. The balance they seek to strike between public and private is fragile, however, and in seeming to position themselves midway between social democracy and neoliberalism, they place themselves under constant pressure to yield ground to the single-minded neoliberals, which they are ill equipped to resist.

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The External The limitations of third-way thinking are even more serious in the international domain. Here, to a disappointing extent, its perspective is inward-looking. Blair's speeches on the "new world order" (1996, 259287) do not look beyond Europe and the relationship with the United States. Hutton argues for a more active British role in the European Union (1997, 91-102) and devotes a few pages to the international financial system, but he makes no specific reference to the non-Western world. Giddens does indeed acknowledge the "daunting" problems of poverty, world inequality, exclusion, and ecological risk (1998, 152-153); however, as we have noted, he considers only one way of addressing them, viz. institutional change—"progress towards greater global governance." He endorses the views of theorists of cosmopolitan democracy, who would redress the limitations of contemporary democracies through democratizing international institutions, for example, through reform of the UN Security Council to give a significant voice to the third world and the creation of a directly elected representative assembly as a new UN institution (Held and Archibugi 1995, 111). However, it has thus far proved impossible to reach agreement on more modest reforms in the UN, nor is there sufficient reason to suppose that, even if they could be achieved, such changes could in themselves bring about a new approach to the issues of inequality and development. Giddens does not address these issues directly; in effect, his perspective is little less Eurocentric than that of other exponents of the third way. It is not surprising that the policies of third-way governments should show a similar lack of concern. Far from reversing the steady decline in foreign aid, they have, if anything, accelerated it. The Schroeder government sharply reduced Germany's diplomatic representation and cultural presence in Africa, going so far as to close the Goethe Institut in Tanzania—a step of particular symbolic significance on the part of the former colonial power there (Grill 2000). In one area, debt relief, the Blair government could claim to have shown greater commitment, especially in seeking to ensure that international pledges were actually implemented (Guardian Weekly, 6 - 1 2 April 2000, 12). But in respect of the prime minister's special priority, education, the opposite was the case. For example, he ignored suggestions that he attend the UN World Forum for Education for All in Dakar in April

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2000, and Britain opposed the "global initiative" endorsed by that conference (Guardian Weekly, 4-10 May 2000, 7). The problems confronting societies in an early phase of the development process are quite different from those of the information age societies with which third-way theorizing is concerned. In Chapter 5 it was argued that there is a presumption in favor of theories of development that take account of different phases and permit policies to vary in accordance with specific conditions in different societies, and that the universalism of the development orthodoxies of international financial institutions is a major obstacle to the success of their policies. Third-way writers have thus far not addressed these issues, but a promising alternative approach is set out in the reports of the United Nations Development Programme. Its concept of human development—noted earlier as "both the process of widening people's choices and the level of their achieved well-being"—is not limited to the economic. In 1990 the UNDP put forward the Human Development Index (HDI) as a more satisfactory means for assessing development than indices based on per capita income alone (UNDP 1990, 10-16). The components of the HDI are life expectancy, education—measured in terms of literacy and years of schooling—and income adjusted for purchasing power parity. It is acknowledged that these are crude measures, and subsequent reports take account of other criteria, notably gender, where the data are available. Even the crude indices, however, show that although there is often a close correlation between income and level of development, exceptions are not infrequent in either direction. To take extreme examples: in 1997 Kuwait ranked 6 in per capita income but 53 in human development, while Costa Rica ranked 33 in human development but 60 in per capita income. The approach advocated by the UNDP is informed by economics but not constrained by neoliberal orthodoxy, and it is open to the differentiation of policy in accordance with particular needs and circumstances. It shares some features with third-way thinking: it is reformist, accepts the market economy, and looks to a middle course between the statism of earlier development models and the downgrading of the public sector that followed. The UNDP accepts the significance of trade for development, for example, but is rather more insistent on the need for imaginative projects to assist countries that at this stage lack the resources, material or human, to compete in the global market. It draws on the work of development specialists of varied backgrounds, non-Western as well as Western, and in particular on the views on

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human capabilities put forward by Amartya Sen. It brings back a longoverdue radicalism into official development thinking. However, the UNDP is not funded to undertake major development projects. Its approach may be more promising than the neoliberal, but there is no mechanism analogous to elections to enable advocates of an alternative policy internationally to replace those whose policies are unsuccessful. In principle, members of the UNDP and like-minded specialists could be recruited to the World Bank. But it is difficult for large institutions to change course; it is likely this would lead merely to a watering down of existing policies. A better option would be to upgrade the UNDP as a separate institution. Even those not persuaded by its recommendations should be open to the introduction of competition into development policymaking. The need for competition is an unquestioned norm of the market economy. Why, then, is monopoly accepted in so vital an area as development policy, when the stakes are of a different order of magnitude from the marginal benefits of competition for affluent consumers? In view of the record of the existing policies, the introduction of competition is long overdue. But how might this be done? How, at a time of "aid fatigue" on the part of governments of the left as much as the right, might resources be made available to a UN agency that does not enjoy the prestige of the World Bank and the IMF? And even if some funding was transferred to the UNDP, this would not address the problem of inadequate overall resources. The logical answer would be that, rather than competing for the same shrinking aid allocations, the UNDP should be given access to a new source of revenue. One that would be singularly appropriate would be the long-canvassed tax on international financial transfers, the Tobin tax discussed earlier. Taxes on gambling sometimes raise ethical concerns, but currency speculation is an unavoidable byproduct of a system unreservedly supported by the major governments. Its adverse consequences would be mitigated if it were taxed in the interest of the globally disadvantaged. A clear use for the tax would assist toward overcoming the lack of governmental motivation that is one of the practical obstacles to its introduction, not lack of feasibility. But governments would have to come under strong public pressure in order to overcome other disincentives: 18 the success of NGOs in doing so on a range of issues, notably on debt relief, shows that this is not impossible. It is thus conceivable that the most urgent global issue could be addressed even without a change in the prevailing ideology.

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CONCLUSION This chapter has sought to identify conditions that could make for a successful social-liberal challenge to neoliberalism. They include mobilizing the extensive but fragmented support for a genuine inclusiveliberal alternative, the creation of an effective counter to the deep-seated American aversion to social liberalism, and a normative shift in the intellectual and political culture of Western societies. Short of a major crisis—the most likely catalyst of change—these developments appear to be some ways off. Nonetheless, Hayek's followers have shown that persistent argument can shake the hold of a dominant ideology. Historical analogies are never straightforward, but social liberals can take encouragement from that experience. In the first instance it is necessary to update the social-liberal program in light of the movement of ideas from social to inclusive liberalism as well as the social and economic changes that receive greater attention in policy discussions. In other words, there is a need for a credible and generally recognized alternative. Two partial alternatives have been considered. The strength of the third way is its sensitivity to social and economic change in Western societies, but its weaknesses are all too evident. In seeking to strike a subtle balance between the old and the new, it concedes too much to neoliberalism—in practice, if not in principle—and at this stage it does not address the issue of the globally disadvantaged. The global perspective is present in the ideas of the UN Development Programme, not a doctrine but a practical application of inclusive-liberal values. Although the UNDP lacks the resources to undertake major development projects, it is conceivable that governments could be brought to make funding available, even without a change in the ruling ideology. It would not be the first time that changes in practice have preceded a change of doctrine.

NOTES 1. Polanyi's influence can be seen inter alia in the work of John Ruggie and Robert Cox. Ruggie's concept of embedded liberalism is derived from his reading of Polanyi's "magisterial work" (1982, 385-388). Cox's volume of collected essays makes frequent reference to Polanyi (Cox and Sinclair 1996 passim, especially 31-32, 155, 254, 515, 527-528). 2. Nonetheless, coalitions of such movements can be successful in

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opposing specific neoliberal initiatives. For discussions of the mobilization of such a coalition against the proposed Multinational Agreement on Investment, see Vallely (1999) and Deibert (2000). For a long-term perspective on the prospects for change through radical movements in civil society, see Cox (1999). 3. For a discussion of ways in which Gramscian theory can complement liberalism, see Murphy (1994, 26^43 and passim). 4. The marxist framework employed by many radicals remains relevant, in that it highlights many of the costs of the neoliberal order; in that sense Marx is by no means superseded, even though the traditional marxist remedy, socialist revolution, has lost credibility. It will be noted that "radical," in its contemporary sense, often refers to movements outside the liberal tradition as they perceive it, whereas before this century most radicals identified with liberalism. 5. Paul Pierson, an advocate of the thesis of robust support for the main institutions of the welfare state, makes some concessions to this possibility in the case of U.K. pension reforms (privatization), and even in more general terms (1996, 162, 167 n. 62). See also Wilding (1997) on the changes brought about by Conservative policy. An Australian example, the use of financial incentives to encourage the trend from public to private school enrollment, was noted earlier. 6. For example, to date Britain has prevented the adoption of a minimum rate of tax on interest, a measure favored by most member governments to reduce the downward pressure on taxes by mobile capital. Instead, member governments will exchange information, but "competitive" taxation is preserved. 7. According to hegemonic stability theory, cooperative regimes such as the liberal trading order require a power committed to the system with sufficient resources to provide "public goods" that are essential to the system's functioning, as well as exerting its influence to ensure compliance with systemic norms. Keohane (1984) argued on the contrary that a liberal system could be maintained without a hegemon through the cooperation of its leading members, using international institutions to secure compliance with the system's norms. The maintenance of the liberal trading system since the 1970s, despite the perceived decline in America's relative economic power, tends to support Keohane's thesis. But the argument is not conclusive, since on an alternative reading of U.S. economic power, as we have seen, its relative decline has been greatly overstated, and its structural power ensures its continuing preponderance (Strange 1987). Strange, however, challenges hegemonic stability theory from another direction, seeing the United States using its hegemonic power opportunistically, not as a provider of public goods. 8. The neoliberal intellectuals' dissatisfaction with the Thatcher government's relatively pragmatic implementation of their paradigm is an interesting aspect of British politics at the time, but it does not detract from the overall interpretation. 9. Krugman (1994, 82-103) offers a critique of the supply-side economics that offered the most notorious of these rationalizations. 10. As with all such generalizations, there are exceptions. The radical

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change in the international monetary regime in the 1970s did not require sustained argumentation. As we have seen, there was little public understanding of the issues, and key members of the U.S. governmental elite were able to change policy to accord with the long-standing (though not politically salient) preferences of the financial elite. 11. This appears to have been the case with respect to so excellent a collection of critical essays as Sheehan et al. (1996) and also Quiggin (1996); Argy (1998) is likely to share the same fate. 12. This is most effective when these assumptions are not spelled out but are implicit in the discourse: for example, through black and white characterizations of the market and command economies or through imagery equating the "modern" with the neoliberal economy, presenting its critics as hopelessly out of date. 13. Sen has had a major influence on the human development thinking undertaken by the UN Development Programme. Different applications of his normative economic thinking may be found in Sen (1981, 1984, and 1987). 14. Giddens expresses a clear normative commitment to equality and inclusion, but there is little normative discussion. His primary concerns are the analysis of social change and the ways these values may be promoted in the new social environment. 15. Blair is chosen in preference to President Bill Clinton; although Clinton was the first to articulate this approach, he had little opportunity to implement it, first due to budgetary constraints, then to his need to compromise with the Republican majority in Congress. 16. Giddens notes that high employment is not closely correlated with deregulated labor markets (1998, 122). Hutton draws attention to studies that show labor markets do not operate in accordance with simple textbook models but are influenced by a range of psychological and sociological considerations (1995, 98-105). 17. For example, in Australia the Howard government campaigned successfully in 1998 on the need to introduce an initially unpopular goods and services tax, but only after years of lobbying by its supporters. 18. As noted earlier, unless all states supported the tax, governments would fear the loss of lucrative financial business to competitors.

8 CONCLUSION

The steps in the argument have been summed up at the end of each chapter. It remains to suggest some conclusions that arise from the argument as a whole. These final pages will (1) draw together the central normative thesis—the foundation of the argument; (2) outline some political themes that have been passed over rather quickly in the discussion; and (3) indicate in broad terms what would be involved in the reorientation of liberal international relations theory that the study envisages. The radical strand in liberalism, it has been argued, is normatively superior to the elitist on two grounds. First, it insists that liberal rights and freedoms extend to all, not just the advantaged, whether elites, classes, or societies. Under present conditions this must mean the whole of humankind, in particular those who for historical or cultural reasons have been subject to long-standing discrimination and those who lack the wherewithal to compete in the global market. Second, it takes seriously the plurality of liberal values: as a minimum, freedom from arbitrary power, meaningful equality of rights, the realization of individual potential, and the betterment of social conditions. There may be tensions among them, but all need to be taken into account; none should be excluded by definition. In any particular context the denial of any one of them, for example, freedom under totalitarianism, may justify according it priority. At the present time, it has been argued, the fulfillment of subsistence needs is a precondition for the exercise of liberal rights and freedoms on the part of a large fraction of the world's population. This justifies including it in the top priority of liberal concerns, and neoliberalism's disregard for it is the clearest indication of its moral bankruptcy.

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The definition of liberalism in terms of a plurality of values rather than a single supreme value was defended on historical grounds; any other definition would exclude some of the thinkers, movements, and debates historians have seen as forming the liberal tradition. It is also noteworthy that most of the contemporary normative theorists discussed in Chapter 4—Falk, Shue, Donnelly, Nussbaum—affirm a plurality of values.1 The normative deficit of neoliberalism renders it unlikely that it can win the broad acceptance required of a legitimizing ideology worldwide. Its values are too narrow, and it cannot offer a meaningful prospect of improvement for the globally disadvantaged. Its claim that the harshness and inequity so widely experienced are unavoidable features of globalization is no more credible than similar claims on behalf of laissez-faire more than a century ago. Yet for the time being neoliberalism retains its hold in the Western political discourse; normative theorists such as those just mentioned are not heard. The longer this situation continues, however, the greater the danger to liberalism—the greater the likelihood of violent reactions and/or a future order based on quite different values. Most discussions of the potential for a counterhegemonic challenge to the neoliberal project focus on pressures from below, from movements within international civil society. But it is unlikely these actors can overcome the neoliberal coalition unless they have the support of powerful allies seeking change from above. That is to say, there would need to be a change in the ideology of some elements in that coalition. This study has emphasized ideological change rather than structural change, partly because the latter is often interpreted deterministically, an approach criticized here on specific grounds but one also open to the more general objection that it neglects agency. Ideological change does not necessarily have to await major disasters. We have seen that neoliberal elites were able to utilize relatively minor setbacks as a catalyst for a shift in the ruling ideology. The process through which social liberalism displaced laissez-faire in nineteenth-century Britain was of a different kind, gradual and uneven, a response by many actors to a variety of problems. One of its features was the difficulty experienced by many liberals in reconciling an established policy with their liberal values. The longer the neoliberal era continues, the more salient the unresolved problems are likely to become. This study has focused on one of these in particular, economic (and human) development, and has also

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noted the probability that over the long run even the more successful neoliberal economies will experience setbacks. Another area of neoliberal inadequacy, for some critics the most decisive, is the environmental. A change in the ideological orientation of Western liberal elites, then, is by no means inconceivable. The third way represents a limited move away from neoliberalism, and it is possible to envisage a more significant departure, such as that discussed in relation to development assistance, independently of a thoroughgoing change in the ideological stance of Western governments. This would be analogous to the nineteenth century move away from laissez-faire. A second political thesis is the continuing responsibility of the major Western states (not "the state" in general) for the character of the present international order and the direction in which it develops. The choices of these states are subject to constraints, but no other international actors have a comparable range of choice. They have a crucial capacity to implement or to block any proposed changes. International institutions act only with the agreement of governments; even the most influential international financial institutions are, in the last analysis, agents of the major Western governments, which control them. A change in the ideology of the staff of the World Bank, for example, could become effective only if it were supported by those governments. Moreover, for the time being governments are the only democratically accountable actors in the international system. The democratizing of international institutions is a significant issue for the longer term, but the difficulty of achieving any progress in this endeavor is shown by the case of the European Union, where the political circumstances—an association of democracies with many interests in common—are relatively favorable. A revival of democratic political culture in the Western states, it has been argued, is one of the conditions for their governments to reassert the primacy of social and political goals, instead of sheltering behind the neoliberal myth of all-powerful market forces. 2 Finally, it is possible to offer some indications of what might be involved in the kind of reorientation of liberal international relations theory proposed in this study. What might it mean if the normative were to have an integral place in liberal theorizing and research, instead of being treated as an afterthought or relegated to the scholarly periphery? One answer is that the present empirical research programs—for example, on the democratic peace, the functioning of international institutions, or the consequences of interdependence—would be seen not as end points of inquiry but as contributions to a larger project, not only

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the achievability of a liberal world order at the present time but also on its normative character. It is remarkable that liberals still endorse a program formulated two centuries ago as sufficient to bring about an order in which their values can be realized in an unproblematic fashion. To take the example of the democratic peace: while peace among democracies is self-evidently a welcome development for liberals, there is an equally unwelcome development—increasing internal war—that shows the world is far from the liberal ideal. It is surprising that liberal research focuses so much on what, relatively speaking, may be easily achieved—peace among countries that are politically stable and have many interests in common—to the neglect of what is currently a far more difficult set of issues. There is no ready-made liberal theory of internal war, but nationalism, ethnic relations, and minority rights are long-standing liberal concerns that could provide a starting point for addressing the issues, as well as liberal theorizing on the causes of war and on conflict resolution—including, in the tradition of Hobson, its political-economic dimension. Thus normative concerns could prompt new lines of inquiry: empirical research as much as further normative theory. The interweaving of the empirical and the normative can be illustrated in the work of contemporary radical-liberal theorists. Their normative theories provide criteria in terms of which current political-economic priorities can be evaluated, but they also lead theorists to focus on social and economic conditions outside the purview of the main empirical theories. In doing so, they open up a societal perspective from below that has been weakly developed in the international relations discipline. A renewed focus on the normative could also prompt a renewed interest in policy studies, in particular the policies and institutions that can promote the goals normative theorists single out as important. How, for example, could international agencies, national governments, and local communities best combine to achieve specific ends such as raising subsistence levels, while at the same time avoiding a long-term relationship of dominance and dependence? Inquiries of this kind could bring together experts from many disciplines; some would have special expertise relating to the task at hand, others would be concerned with the economic viability of different proposals. Those from international relations would have an interest in the political and institutional aspects and in the overall pattern of relationships, thus would be well placed to question universal economic prescriptions. Except for strategic studies,

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international relations devotes less attention to policy issues than many of the social sciences. There is ground for concern when a field of study is driven by policy concerns, especially when these reflect a governmental agenda, but what is envisaged here is the role of social scientists in bringing new thinking to bear on issues where established policies are manifestly inadequate. The argument for reintegrating the normative is not limited to liberal international relations theory and research but applies throughout the discipline and indeed, it has been argued, throughout the social sciences. E. H. Carr's strictures concerning a consistent realism—in particular that it lacks a goal, a right of moral judgment, and a ground for action—could be extended to all theory and research that aspires to be consistently value-free. The remedy proposed here is in the end a modest one. It is not that all studies should focus on the normative, but there should be a commitment to normative explicitness and critical engagement with normative issues, at least so far as major projects are involved. This should be within the grasp of a discipline that has come to terms with the epistemological and ontological debates of recent years.

NOTES 1. A philosophical defense of pluralism, not attempted here, would raise complex issues. The typical historical narrative does not address the question whether there are incompatibilities among the liberal values, whereas this is a primary concern of prominent advocates of a pluralist liberalism such as Isaiah Berlin and John Gray (Gray 1995, 64-86). The present study examines incompatible liberal doctrines but leaves open the question of incompatibilities among liberal values; in many political contexts they may complement one another. To illustrate the complexity of the issues: Gray's argument for "agonistic liberalism" proceeds from his rejection of the "Enlightenment project," whereas many liberals would defend the values of the Enlightenment, though not necessarily its view of history. 2. For a contrasting perspective on the potential role of the state, see Falk (1999, 35-47). In Falk's view, changes in the international system have gone too far for states to play this kind of major role as agents of change, whereas this study views them as necessary intermediaries.

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INDEX

Acheson, Dean, 68 Adams, Henry Carter, 38-39, 52nl4 Adams, John, 58 Adelman, Irma and Cynthia Taft Morris, 116 Africa, 113-114, 116-118,120, 122-123, 129, 154, 199 Aid. See Development, assistance Alternatives: absence of, 86, 95, 107-110, 164, 182, 186; search for, 49,192-201 Angell, Norman, 74 Arblaster, Anthony, 17-19, 20, 21, 31, 51m7 Argy, Fred, 157-158 Asian financial crisis, 87, 96, 100, 120, 123, 186, 188 Australia, 107-112, 133nl9, 141, 157-158, 160-162, 187-188, 194-195 Authoritarian regimes, 128, 131 Balance of power, 57, 64 Barber, Benjamin R., 130 Beck, Ulrich, 94 Beitz, Charles, 82 Bentham, Jeremy, 3, 20, 31-32, 59, 63,67 Berlin, Isaiah, 3, 30, 209nl Bhagwati, Jagdish, 96 Bird, Colin, 19

Blair, Tony, 192, 194-200, 204n75 Blandy, Richard, 161 Blaug, Mark, 33, \12nl9 Bourgeois, Léon, 38 Brandt Commission, 115 Brennan, Geoffrey, 156 Brentano, Lujo, 37 Bretton Woods system, 131ni, 150 Britain, 155-156, 187. See also Liberalism; and names of individuals Campbell-Bannerman, Henry, 167-168 Capitalism, models of, 99-100, 151, 180 Capital mobility. See Financial liberalization Carr, E. H., 11, 65-68, 91m5, 209 Change, forces for, 48,175-179 China, 88,126-127,148, 171«« Civil society, 122, 123, 197 Clarendon, Earl, 34 Clinton administration, 126, 129, 192, 204m75 Coalitions: changing, 135-138; counterhegemonic, 178-180, 206; neoliberal, 140-145; social liberal, 138-140, 180-182; transnational, 5, 138, 140, 148, 163, 180-183 Coats, A. W., 33 Cobban, Alfred, 63

231

232

INDEX

Cobden, Richard, 33, 60-62,65 Cold War, 67, 68, 74, 125-126, 147-149,183; end of, 1, 2, 8,10, 15, 69,148 Communitarianism, 46-47, 80, 92nl5 Conquest, 56-57 Conservatism, 18, 3 6 , 4 3 , 7 6 - 7 7 , 198 Constant, Benjamin, 30 Constitutionalism, 23, 24, 29-30, 59 Constraint versus choice, 97-100, 105-107,135 Consumerism, 143-145, 170n4 Cosmopolitanism, 80, 82,193 Cox, Robert W„ 9, 13, 16«5, 137, 139-141, nOnl, n2, 178, 182, 203«2 Cranston, Maurice, 84, 133n79 Cromwell, Oliver, 21, 22 Cultural imperialism, 55, 60-61, 64-65,75,84 Culture, effects of neoliberalism, 87, 110-112, 131, 143-144, 146, 155, 170 n4 Debt, 118, 135, 199,201 Democracy, 41, 81, 123; American, 28-29, 145; fear of, 28, 29-32; in international institutions, 193, 199, 207; and peace, 9, 55-56, 58-59, 70, 72-74, 208; prerequisites for, 128; promotion of, 72, 88-89, 127-129, 145-146, 170n5; Schumpeterian, 89,129-131,142, 146, 191; theories of, 72-73, 129-130, 134n21; under stress, 89, 108-110, 130,142 Deprivation, 81-82, 88, 93, 113-115, 124, 163, 184; alleviation of, 114-115,119 Deregulation, 86-87, 108, 132/i2. See also Financial liberalization De Tocqueville, Alexis, 28, 30, 47 Deutsch, Karl, 67, 77 Development, 113-124; assistance, 114-115, 121, 133 nil, 199-201;

concept, 115-116,122,125, 200; conditions favoring, 116-117,128; in East Asia, 118; failures, 116-121; neoliberal policies, 118, 157; theories, 115-117, 200-201 Dewey, John, 39 Dickens, Charles, 36 Dickinson, H. T., 24-25 Diderot, Denis, 29 Donnelly, Jack, 83-84 Dunn, John, 17, 18 East Asia, 113, 116-118, 121, 128 Economic growth, 101, 104, IhlnlO, 156-158 Economic nationalism, 36-37, 73, 91 nlO Economic orthodoxy, 40,119, 200 Economics: authority of, 13, 136, 153, 167; bias, 5, 161-162, 165-166,189; discipline, 106, 153-160, 166-168; as dominant discourse, 13, 44, 109, 154, 163; neoclassical, 116-117, 159-160, \12nl8; neoliberal, 157-158, 163, 165, 172ni 7; nineteenth-century, 32-36, 153-155; normative ambivalence, 161-162, \13n21, 191; and power, 154, 163-166, 169, \13n22; profession, 5, 74, 154, 158, 164-165, \12nl7, \TSn21, 189; as science, 33, 154, 156-157,159,163-164,190; as secular religion, 155,166-169, 189; simplifications, 33-35, 106, 156,188 Economist, 33-34, 87, 96, 153 Egalitarianism. See Liberalism, radical Electoral reform, 29-32, 51w9 Elites, neoliberal, 140-141, 186-187, 190 Ely, Richard, 38-39, 52nl4 English Revolution, 20-22 Enlightenment, 29, 31, 47, 52nl7, 57-59, 168, 209w7 Environment, 5-6, 161, 177, 181, 207

INDEX

Equality of opportunity, 37, 46, 48, 190 European Union (EU), 179, 184-185, 193 Evans, Gareth, 133-134n79 Falk, Richard, 6nl, 81, 115,209«2 Feminist theory, 4 7 ^ 8 , 84-85 Financial liberalization, 86, 94, 118, 139-140, 142, 146, 188; criticisms of, 95-97, 177; support for, 96, 120; U.S. policy on, 150-151, 184 Financial regulation, 97, 193 Freedom, 21, 38, 48-49, 53n20, 68, 80, 81, 83; negative and positive, 30, 37, 41, 45, 52nl3, 144; as supreme value, 18-19, 35, 42, 45, 52 nl7, 164 Free trade, 68, 70, 86, 108, 118, 129, 142,167-168; in the nineteenth century, 33-34, 61-62, 150; and peace, 56, 57,73 French Revolution, 26, 29-30, 62 Friedman, Milton, 4 3 ^ 4 , 52nl8, 155, 161, 167 Friedman, Rose, 44, 52nl8, 167 Fukuyama, Francis, 69-70 G-7, 124, 207 Gaddis, John Lewis, 8 Galbraith, John Kenneth, 143, 146, 165 Garnaut, Ross, 126 Garrett, Geoffrey, 99 Giddens, Anthony, 192-193, 196, 198, 199, 204nl4 Gill, Stephen, 137, 140-141, 170«;, 179 Gilpin, Robert, 73 Global humanism, 81 Globalization, 3, 138, 184, 192; concept, 94, 97; consequences, 95, 109; imperatives of, 1, 4, 12, 97, 108, 164 Governance, 87, 121-124 Gramsci, Antonio, 170«7, 178. See also Neo-Gramscian theory

233

Gray, John, 17, 20, 47, 51n7, 53«27, 100,209n7 Great Depression, 39-41,138, 156, 176, 182 Green, T. H„ 3, 37, 39,40, 41, 194 Gregory, Bob, 105-106 Gurtov, Melvin, 81 Haggard, Stephan, 116-117 Halliday, Fred, 148, 149 Hartz, Louis, 20, 27-29, 38-39 Hayek, Friedrich, 3, 43-44, 82-83, 155, 161, \12nl9, 187-188, 202 Hegel, G. W. F., 3, 37, 47 Hegemonic stability theory, 186, 203«7 Hegemony: British, 149-150; in Gramscian theory, 137,141-145, 178. See also United States Heilbroner, Robert F., 35,132«2, 165 Herz, John H., 66 Higgott, Richard and Nicola Phillips, 100 Historical approach, 2-3, 116 History, neglect of, 3, 44, 53nl8, 70, 87-89, 109, 116, 160-161 Hobhouse, L. T„ 37-39, 41, 45, 47, 77 Hobson, John A., 61, 91 n4, 208 Hoffmann, Stanley, 9-10, 14, 55, 82 Howard, Michael, 58 Human capabilities, 84, 201 Human rights, 81, 83-84, 89, 124-127; civil and political, 83, 133n7S; diplomacy, 126-127; economic and social, 81, 83, 89, 125-127, I33nl8, 145; andneoliberalism, 84,125-126; Western conception of, 128 Huntington, Samuel P., 128, 129 Hutton, Will, 142-143, 194-195, 197, 199 Hyden, Goran, 123 Ideological change, 137, 186-188, 206, 207 Ideology: concept, 3, 11, 92nl8, 153,

234

INDEX

164; and democracy, 128, 182; and international order, 6 , 9 0 , 1 2 4 , 127,131,163-164,206; legitimizing, 12-13, 85, 189; neoliberal, characteristics, 1 - 2 , 4 2 - 4 3 , 85-88, 107; neoliberal, consequences, 95, 104-107, 110-113; and particular interests, 66, 90, 137, 141-145, 153, 165 IMF. See International Monetary Fund Imperialism, 61 Individualism: concept, 19,162,193; and economics, 161-162, 167, 168; in liberal thought, 17-19, 23, 31, 46, 48^49; methodological, 44, 162, \12nl9, n20; in political culture, 22, 28-29, 38-39, 144 Individual responsibility, 38,47, 80, 82,193 Indonesia, 88, 113, 123-124, 128, 188 Industrial society, 4, 32, 36, 50 Inequality, increasing, 101, 142-143 Interdependence, 73, 74, 79, 82, 148 Internal policies, link to external, 3-4, 8-9, 57, 78-79, 137-138 Internal war, 73, 208 International court, 59, 63 International financial institutions, 117-118, 121, 124, 151 International Monetary Fund (IMF), 1, 86, 88, 100, 124, 158, 184, 188 International order: concept, 6n2, 13, 16«5, 73, 81; neoliberal, 1, 72, 80, 81, 85, 93,110; post-Cold War, 1, 4,10-13 International organization, 3-4, 63, 64, 79 International political economy, 9, 68-69,137 International relations discipline, 7-9, 65-71, 91 «5, 95 International relations theory: American dominance of, 9-10; critical liberal, 10, 15; critiques of, 8-10; empirical, 13, 14, 71, 79-80, 85,90; liberal, 2 , 9 - 1 5 , 55-56,

65-85; normative, 7, 14-15, 71, 79-85,191, 207-209; relation to policy, 9, 208-209. See also Neo-Gramscian theory; Realist theory Intervention: governmental, in economy, 2, 35-36, 86, 118, 162, 163; international, 58-61, 64, 123-124 Irish famine, 34, 153 Justice, 4 3 , 4 5 ^ 7 , 81-83, 129 Kant, Immanuel, 3, 35, 37-38, 58-59, 63, 75, 85, 9\n9 Kasper, Wolfgang, 167 Keating, Paul, 168 Kegley, Charles W„ 70 Kelly, Paul, 108, 124 Kennan, George F., 66, 67 Keohane, Robert 0 . , 71,73, 75-77, 79, 9\nl3, 186, 203n7 Keynes, John Maynard, 35, 40, 41, 42, 85, 158-159,178 Keynesian economics, 40-43, 135, 138, 155, 188 Krugman, Paul, 104,156, 203n9 Kukathas, Chandran, 48-49 Kurth, James, 8, 9 Labor market, 98, 105, 193; flexible, 104-106, 108, 194, 204nl6 Laissez-faire, 3, 33-36, 39, 42, 52nl7, 176; compared with neoliberalism, 87,153-155; criticisms of, 34-36, 62 Language of policy making, 112, 154-155 Laski, Harold, 17 Latham, Mark, 194-198 Latin America, 114, 116-118 League of Nations, 63-67,75 Legitimacy, 11, 13-14, 23, 50, 90, 128, 144. See also Ideology Levelers, 21-22 Leys, Colin, 117 Liberal international economic order, 39, 68, 141, 176

INDEX

Liberalism: in America, 26-29, 38-39, 43, 152; in Britain, 21-26, 31-38, 59, 63; classical, 41-42, 52nl7, 84, 107, 125, 127, 184; cognitive, 77; concept, 17-20, 51«2, 206, 209nl; elitist, 25, 50, 75, 89; elitist versus radical, 2, 4, 20, 32, 49-50, 64-65, 90, 205-206; ideology, 11-12; in France, 29-30, 38; in Germany, 36-37, 63; inclusive, 45-50, 193, 198, 202; institutional, 75-77, 79; in international history, 56-65; of the powerful, 61-62,64, 66, 89, 146; in public discourse, 65-66, 69, 72-73,76, 90; radical, 20, 22, 25-26, 46, 85, 90, 190-191, 205, 208; social, 36-42, 50, 62, 138-139, 150, 165-166, 184-185, 188-189,197-198; sociological, 77; tensions within, 2-3,12-13, 19-22, 31; theory and practice, 3, 10; values, core, 15, 24, 32,40, 41, 55; values, multiple, 17-18,42, 50, 205-206. See also Democracy; Free trade; Ideology; Individualism; International relations theory; Neoliberalism Libertarianism, 19, 46, 161, 187 Liberty. See Freedom Linklater, Andrew, 49, 92nl6, 94 List, Friedrich, 36-37 Locke, John, 3, 20, 22-24, 56-57; influence of, 22-23, 25-28 Long, David, 77 Louis-Philippe, King, 30 MacPherson, C. B„ 21-22 Mai thus, Thomas, 32-35, 5\nl2, 158 Marcet, Jane, 33 Market, the, 41^12, 144, 162, 167-168; self-regulating, 43, 89, 176-177 Marshall, Alfred, 42, 159 Martin, Hans-Peter and Harald Schumann, 184-186

235

Martineau, Harriet, 33 Marxism, 14, 40, 168-169, 202«4 Mazzini, Giuseppe, 60 McGuinness, P. P., 105 McNamara, Robert, 118 Mill, James, 31 Mill, John Stuart, 20, 21, 31-32, 41, 47, 60-61 Milton, John, 21, 23 Minogue, Kenneth, 19, 51 n4 Minorities, rights of, 48-49 Moravcsik, Andrew, 71, 78-80, 85 Morgenthau, Hans J., 66-69, 91n6 Mueller, John, 74 Multiculturalism, 4 8 ^ 9 , 84, 193 Murphy, Craig N„ 16n4, llQnl Nationalism, 62-63. See also Selfdetermination Natural rights, 23, 31 Neo-Gramscian theory, 2, 5, 9, 15, 137-138, 178-179, 203n3 Neoliberalism: ascendancy, 42-45, 93, 112, 115, 135, 139, 186; effects of, 4,12,131, 206-207; expanding agenda, 109-112, 163, 187-188; normative deficit, 50, 125-126, 131, 144, 182, 206; policies, 100, 104-112, 117-121; priorities, 88, 89, 129; resemblance to realism, 82-83, 89-90, 164; resistance to, 47, 180-192, 206; support for, 5, 135-136, 151, 197. See also Economics; Elites; Ideology; International order Nevile, J. W„ 156 New Deal, 40-41,136 Nongovernmental organizations (NGOs), 77, 87, 123, 179, 201 Nonintervention. See Intervention Normative assumptions, 13, 15, 45, 71, 189-191 Normative theory. See International relations theory; Political theory; Social science Nozick, Robert, 46, 53nil Nussbaum, Martha, 84

236

INDEX

O'Neill, Onora, 82 Organization for Economic Cooperation and Development (OECD), 154, 158 Paine, Thomas, 26, 57-58, 85, 90nl Palmerston, Viscount, 61-62,65, 68 Pareto, Vilfredo, 159-160, 173n25 Patterson, Annabel, 19,51 n6 Peace, 19. See also Democracy Philosophy, 3, 10, 19 Pocock, J. G. A., 26-27 Polanyi, Karl, 3, 5, 41, 175-178, 202nl Political culture, 42, 190-192; American, 9-10, 27-29, 38-39, 41,52n77, 68, 145, 183-184; Western, 13,40, 44, 71, 107-112, 146, 184 Political economy. See Economics Political theory, 2, 10, 14, 46, 71 Political vision, 107-109 Poverty, 114, 115, 118, 120-121. See also Deprivation Priestley, Joseph, 25-26 Privatization, 62, 86, 99, 110-111, 118, 119, 157; of water, 120 Progressive movement, 39, 52nl5 Property, 21-25, 28, 36 Przeworski, Adam, 122 Public choice theory, 44-45, 53nl9 Public institutions, 42, 87, 110, 122, 154-155, 163 Radical social movements, 179, 202n2 Rational choice theory, 53nl9, 85 Rawls, John, 3, 4 5 ^ 6 , 53n20, nil, 82 Reagan, Ronald, 118-119, 132«7, 165, 187 Realist practices, 4, 55, 57, 65, 67-68, 70, 90, 126 Realist theory, 4, 10-12, 15, 65-71, 76, 78-80, 147, 184-186 Regimes, international, 69, 76, 186 Republicanism, 26-28

Ricardo, David, 32-35, 5\nll, 158-159 Richardson, James L., 10-13, 16n6 Roosevelt, Franklin D., 40,145 Ruggie, John G„ 41, 73, 95, \l\nl0 Russett, Bruce, 72-73 Russia, 14, 120, 147-149, 171n