The Origins of Neoliberalism Neoliberalism is a doctrine that adopts a free market policy in a deregulated political framework In recent years, neoliberalism has become increasingly prominent as a doctrine in Western society, and has been heavily discussed in both academia and the media In The Origins of Neoliberalism, the joint effort of an economist and a philosopher offers a theoretical overview of both neoliberalism’s genesis within economic theory and social studies as well as its development outside academia Tracing the sources of neoliberalism within the history of economic thought, the book explores the differences between neoliberalism and classical liberalism This book’s aim is to make clear that neoliberalism is not a natural development of the old classical liberalism, but rather that it represents a dramatic alteration of its original nature and meaning Also, it fights against the current idea according to which neoliberalism would coincide with the triumph of free market economy In its use of both the history of economics and philosophy, this book takes a highly original approach to the concept of neoliberalism The analysis presented here will be of great interest to scholars and students of history of economics, political economy, and philosophy of social science Giandomenica Becchio is Assistant Professor of Economics at the University of Turin, Italy Giovanni Leghissa is Assistant Professor of Philosophy at the University of Turin, Italy Routledge Studies in the History of Economics For a full list of titles in this series, please visit www.routledge.com/series/SE0341 183 Ricardo and the History of Japanese Economic Thought A selection of Ricardo studies in Japan during the interwar period Edited by Susumu Takenaga 184 The Theory of the Firm An overview of the economic mainstream Paul Walker 185 On Abstract and Historical Hypotheses and on Value-Judgments in Economic Sciences Critical Edition, with an Introduction and Afterword by Paolo Silvestri Luigi Einaudi Edited by Paolo Silvestri 186 The Origins of Neoliberalism Insights from economics and philosophy Giandomenica Becchio and Giovanni Leghissa 187 The Political Economy of Latin American Independence Edited by Alexandre Mendes Cunha and Carlos Eduardo Suprinyak 188 Economics as Social Science Economics imperialism and the challenge of interdisciplinary Roberto Marchionatti and Mario Cedrini 189 Jean-Baptiste Say and Political Economy Jean-Baptiste Say Edited by Gilles Jacoud 190 Economists and War A heterodox perspective Edited by Fabrizio Bientinesi and Rosario Patalano The Origins of Neoliberalism Insights from economics and philosophy YORK YORK Giandomenica Becchio and Giovanni Leghissa ~~o~;J~n~~~up LONDON LONDON LONDON LONDON AND NEW YORK First published 2017 by Routledge Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2017 Giandomenica Becchio and Giovanni Leghissa The right of Giandomenica Becchio and Giovanni Leghissa to be identified as authors of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988 All rights reserved No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Names: Becchio, Giandomenica, author | Leghissa, Giovanni, 1964- author Title: The origins of neoliberalism : insights from economics and philosophy / Giandomenica Becchio and Giovanni Leghissa Description: New York : Routledge, 2017 | Includes index Identifiers: LCCN 2016018993 | ISBN 9780415732246 (hardback) | ISBN 9781315849263 (ebook) Subjects: LCSH: Neoliberalism | Economics History | Social sciences Philosophy Classification: LCC HB95 B393 2017 | DDC 330.1 dc23 LC record available at https://lccn.loc.gov/2016018993 ISBN: 978-0-415-73224-6 (hbk) ISBN: 978-1-315-84926-3 (ebk) Typeset in Times New Roman by Taylor & Francis Books Contents List of tables Introduction: the counter-revolution of neoliberalism This book’s contents 16 vii 1 Foucault and beyond 1.1 Foucault’s distinction between liberalism and neoliberalism 28 1.2 The neo-Marxist conception of neoliberalism 42 1.3 The relationship between state action and economy 52 1.4 Neoliberalism and the question of systemic complexity 59 28 The building of economics as a science 2.1 The revolution of marginalism: how political economy became economics 78 2.2 General economic equilibrium and econometrics in the 1930s: from Vienna to Chicago 86 2.3 The Americanization of the discipline: building mainstream economics 90 2.4 The rise of neoliberalism in Chicago: the hegemonic role of both neoliberalism and neoclassical economics 94 77 The building of individuals as rational agents 3.1 Economic rationality and homo oeconomicus: from Vienna and Lausanne to Chicago 114 3.2 The theoretical and methodological distance between Vienna and Chicago 119 3.3 Karl Polanyi’s critique of neoliberalism 126 113 vi Contents Turning the world into a firm 4.1 Neoliberalism and the political role of the firm 146 4.2 The neoliberal theory of organizations 162 4.3 Institutions, evolution and the frame of individual choices: or, farewell from the neoclassic nuts and bolts 172 Postscript: a new ethics for a new liberalism? Index 146 193 201 Tables 3.1 Classical liberalism versus neoliberalism 3.2 Austrian versus Chicago school of economics 125 126 This page intentionally left blank Introduction The counter-revolution of neoliberalism Neoliberalism has been defined as a political doctrine that basically adopts a free market in a deregulated political framework.1 Lately many publications have been dealing with a rethinking of neoliberalism in a broader perspective as a ‘collective’ thought (Mirowski 2009; Dean 2014) following what Weber called ‘political oriented action’, i.e the attempt to influence or seize power (Weber [1922] 1968) by organized groups.2 We consider neoliberalism as the Weltanschauung of the late twentieth century whose roots are deeply grounded in economic theory as it has been developing in the mid-twentieth century Neoliberalism is not a ‘vision’ (according to Schumpeter’s definition), which shapes the ‘toolbox’, like classical liberalism has been for political economy in the nineteenth century or socialism for Marxism (Schumpeter 1954) Neoliberalism is either the marketing of neoclassical economic theory or its propaganda Neoliberalism is based on a relatively simple principle: the interaction between the maximization of expected results given scarce means and revealed preferences In a society ruled by a neoliberal system, economic rationality has reached primacy.3 This primacy has to be intended neither as a Marxian ‘structure’ nor as a mere pursuit of getting higher profits for capitalists It is meant as the regular application of the logic of economics as the only rational way of organizing private lives as well as politics and the public sphere In this book both history of economics and philosophy will be used to help with a new interpretation of neoliberalism This book’s aim is to show the link between neoclassical economics (we will be using the terms ‘neoclassical economics’ and ‘mainstream economics’ as synonymous throughout the book) and neoliberalism as the most persuasive cultural doctrine of our time (Mirowski 2013) Numerous publications have appeared lately on the nature of neoliberalism spreading from academia to the press, involving social scientists as well as journalists and opinion makers The literature on the making of mainstream economics is also quite vast, especially amongst economists and historians of economics This book represents a tentative approach to how to consider neoliberalism as deeply rooted and developed within the process of emergence of a particular way of thinking about political economy as a science (neoclassical 196 Postscript Although Hegel correctly posed the question of the idiosyncratic relation between individual freedom and social complexity, his solution, that considers freedom as the appreciation of necessity, can be regarded as the very first form of the logic of rational choice theory On a related note, this is also one of the most powerful aspects of the ambiguity around the notion of freedom within the tradition of classic liberal philosophy Following scenario number 2, the urgency of a new ethic emerges Setting aside the dispute around virtues and their proper use to build up a just and free society, the present state of neoliberal western society reveals the urgency ‘to re-ethicize the social sciences’ (McCloskey 2011, 24), and to go toward an effective ecological economics It is necessary to go back, at least partially, to the old principles of classical liberalism in a new perspective, based on what can be called virtuous nihilism Against O’Neill (O’Neill 1996), a virtuous nihilism is possible It will be restoring an ethics based on the classical virtues into the economic sphere, without any metaphysical implication Let’s make this point clearer According to the postmodern vogue, nihilism is, in the field of ethics, what corresponds to the ‘anything goes’ advocated by enthusiastic readers of Feyerabend’s work in the field of epistemology What is at stake here is not, in fact, the postulation of the non-existence of the truth and the consequent affirmation of the relativism in ethics and pluralism in epistemology The point is, rather, to acknowledge how reasonable was Nietzsche’s claim that individuals can be really free if and only if they have the opportunity to shape their own life according to principles that not deserve an ultimate foundation (in the sense of a Letztbegründung) The narrative about god’s death and the following emancipation of mankind from strong metaphysical burdens is essentially focused on this claim Moreover, Nietzsche’s conception of ethics suggests that the principles we need to give some order to our moral life depend on the notion of taste As it is well known, taste has, traditionally, a bad reputation: Nietzsche’s willingness to underscore the importance of taste, as far as ethical issues are concerned, is perhaps a symptom of his penchant for a certain philosophical coquetry It is common to simply consider flawed any conception of ethics that does not rest on universal principles, which are per definitionem different from taste: moral principles remain the same, because they are linked with the metaphysical continuity in time of the subject that refers to them, while taste, as well as any other form of preference, can change over the course of time (Nagel 1970) To say that a strong foundation of value concepts is not strictly necessary, however, amounts simply to say that there must be an arena where the different positions – better, the different conceptions of good – have the opportunity to be tested, discussed, compared to each other, and so forth, as freely as individuals when they decide to discuss differences concerning their tastes In other words, the claim that a virtuous nihilism or, better said, a post foundational ethic has a sufficient degree of plausibility means that a rational discussion about moral values is not aimed at constructing a moral theory: a good psychology of moral conducts would be enough Strong moral theories, Postscript 197 like utilitarianism or Kantism, imply either commitments to metaphysical assumptions or an excessive detachment from the empirical context within which moral subjects really live To be plausible, however, the ethical discourse must be committed simply to the concreteness of the situation within which the moral subject is called to take decisions Furthermore, any moral situation is rooted in the body that feels and is affected by emotions (Williams 1973) Radicalizing the stance Williams has defended since the beginning of his philosophical career, Nussbaum has taken a step further by assuming that taking emotions seriously is a good premise to come to the construction of moral theories The bodily sphere in which emotions are rooted is not the sphere of unconscious or irrational drives Emotions have a cognitive significance; they are not simply the rough material upon which moral judgments are constructed Thus, the philosophical reflection about how human beings should live their lives, how they should behave properly, and how they should interact with their mates, must stem from serious considerations about how human beings build and shape their preferences – even the preferences to which a moral significance is attributed – by listening to their emotions and feelings (Nussbaum 2001) Nussbaum’s aim is, however, to arrive at a substantial conception of good: it is more prudent to maintain a certain caution toward this substantial conception of good, though It is preferable to observe how human beings conduct their lives in accordance with the importance they confer to their motivations This formulation might sound pleonastic Nevertheless, precisely in the case that a certain adherence to real life is felt as necessary, the difference between the simple fact that an individual has a reason for behaving in a specific way and the fact that another individual attributes a specific importance to the reasons that motivate the chosen action must be underscored This process makes the nihilistic – or post foundational – approach to ethics meaningful: value concepts, as far as they constitute the reason to act, or, more precisely, the reason one would yield if asked to justify the choice to or not to something, are chosen for their emotional impact upon the subject, and for the amount of emotion that is connected to them Emotions are important to individuals as decision makers Acknowledging their importance means to be ready to observe with respect, and without irony, the intensity of moral conflicts When disputing about value concepts and different morally relevant courses of action, individuals well know how violent the outcome of the dispute could be In such a context, where the contrast between moral values reflects a contrast between different conceptions of the world, nobody would mark himself a relativist Nonetheless, a post foundational approach to ethics is well disposed toward the methodological relativism that characterizes cultural anthropology This discipline does not provide examples of human behaviour that always fit into the compact building of moral theory The set of case studies provided by cultural anthropology refines our insights and our capability to appreciate cultural differences Deconstructing neoliberalism and its dogmatic efficiency-oriented principle as the only valid principle to handle values and goals, is essential Neoliberalism tends to reduce the spread of cooperative behaviours and the 198 Postscript possibility that cooperation will become the norm in social dynamics This process would entail, de facto, a considerable reduction of the anthropological options disposable for the individuals living in a neoliberal society This seems to be true with regard to the community composed by students of economics and their teachers (Frank, Gilovich and Regan 1993) On a broader scale, a greater diffusion of cooperation can be noticed in countries or populations that are not totally under the influence of the Western civilization and are closer to the periphery of the empire (Henrich et al 2004) The anthropological perspective helps, in general, to recast how cooperation and competition are both essential components of human associated behaviour and how governmental frames bear upon them (Gintis et al 2005; Bowles and Gintis 2011) The recourse to data collected by anthropologists or evolutionary biologists is not, however, a simple aid that ethics needs in order to give more substance to its own theoretical framework Ethics is all about looking at how individuals attempt to behave properly according to some reasons in the presence of some institutional frames that play an essential role in shaping these reasons – as well as the preferences that mainstream economics considers not subject to any change (Hodgson 2002; 2006) An ethical discourse structured in this way can, then, become the presupposition for a well grounded and strategic critique of neoliberal reason In general, it seems difficult just to imagine a critique of given social arrangements that are regarded, no matter for what reason, as unfair, without proposing, at the same time, a modification of the institutional asset within which human action takes place First, the presence of institutional contexts granting the fairness of the contest about controversial issues or principles is required This fairness entails at least the implementation of the principle audi alteram partem, which is one the minimal requirements for a good society (Hampshire 2000) There are other requirements, however, that must be taken into consideration and are placed in a rather ambiguous position between the claim that procedures are all that we need and the claim that a substantive conception of good is at least desirable Drawing attention to the pivotal role played by procedures has always been a concern for the supporters of the classical liberal tradition This occurred because a clear definition of governmental procedures would have constituted the best way to defend those spaces of liberty within which individuals are supposed to act in the absence of external constraints Another reason to be concerned about the dangers represented by the shift from negative to positive liberty is related to the anthropological pessimism that pervades a big part of the liberal tradition Contrary to republicanism la Pettit, which is confident about the possibility that virtuous citizens can build a society where mutual relations based on non-domination can be developed either in institutional practices or in shared habits (Pettit 1997), a considerable part of the tradition of classical liberalism accepts the pessimistic conception of human relations that is impressively grounded in Hobbes’ Leviathan: a political order governed by institutions aimed at regulating the normal interaction among humans, in order to prevent those who are governed from being governed too much Postscript 199 What happens, however, when the old liberal order, which was supposed to provide for a clear separation of different realms of action within society, has lost its meaning, as in the case of contemporary neoliberal society? A sort of phantasmatic return of the late medieval and early modern conception of the body politic, as Kantorowicz (1957) described in his masterpiece, affects societies ruled by neoliberalism Neoliberalism has transformed institutions into incorporated bodies, to be intended as organzations, for the government of individual lives as though they were subject to the rules of an enterprise The neoclassical model of rationality assumes a mythological feature as soon as it leaves its original domain, i.e economic theory, to become the discourse that innervates the neoliberal project In such a framework a step beyond classical liberalism would be necessary This shift should embrace at least the possibility to open a discussion on a substantive theory of justice related to freedom The increasing inequalities spread all around the world provide a topic – even if not everybody agrees with it – for going in this direction (Pogge 2008) Although the impossibility of reaching a universal consensus about the major tenets of this issue can be taken for granted, it can be useful to re-consider the question raised by the classical liberal tradition about a possible connection between virtue and government In other words: if there are good reasons for being unsatisfied with both a general theory of justice, which could probably never reach a universal consensus, and the management of social issues like inequality based on the calculus of consensus which underpins the political project of neoliberalism, then, the only way out, albeit utopic, seems to refer to the theory of virtue that goes back to the ancients As Aristotle taught us: justice is complete virtue; virtue, however, not unqualified but in relation to somebody else It is complete virtue in the fullest sense, because it is the active exercise of complete virtue; and it is complete because its possessor can exercise it in relation to another person, and not only by himself (Aristotle, Eth Nich 1129b 30) And: ‘in every kind of knowledge and skill the end which is aimed at is good (…) In the state, the good aimed at is justice; and that means what is for the benefit of the whole community’ (Aristotle, Pol 1282b 14) The coexistence of a virtuous society and individual freedom is the persistent challenge of that post foundation ethic, if it is able to supersede the neoliberal vision References Aristotle (1953) The Nichomachean Ethics London: Penguin Books Aristotle (1962) The Politics London: Penguin Books Boulding, K (1969) ‘Economics as a Moral Science’, American Economic Review, Vol 59:1, pp 1–12 Bowles, S and Gintis, H (2011) A Cooperative Species: Human Reciprocity and Its Evolution Princeton, NJ: Princeton University Press 200 Postscript Brown, W (2015) Undoing the Demos: Neoliberalism’s Stealth Revolution New York: Zone Colander, D (2000) ‘The Death of Neoclassical Economics’, Journal of the History of Economic Thought, Vol 22:2, pp 127–143 Crouch, C (2011) The Strange Non-Death of Neoliberalism Cambridge: Polity Fine, B (2000) ‘Economics Imperialism and Intellectual Progress: The Present as History of Economic Thought’, History of Economics Review, Vol 32:2, pp 10–35 Frank, R.H., Gilovich, T and Regan, D.T (1993) ‘Does Studying Economics Inhibit Cooperation?’, Journal of Economic Perspectives, Vol 7:2, pp 159–171 Fraser, N (2015) ‘Legitimation Crisis? On the Political Contradictions of Financialized Capitalism’, Critical Historical Studies, Vol 2:2, pp 157–189 Gintis, H., Bowles, S., Boyd, R and Fehr, E (Eds) (2005) Moral Sentiments and Material Interests: The Foundations of Cooperation in Economic Life Cambridge, MA: The MIT Press Grossbard-Shechtman, S and Clague, K (2002) ‘Introduction’ in Grossbard-Shechtman, S and Clague, K (Eds) The Expansion of Economics: Toward a More Inclusive Social Science Armonk and London: M.A Sharpe, pp 4–20 Hampshire, S (2000) Justice is Conflict Princeton, NJ: Princeton University Press Hegel, G.W.F (1991) Elements of the Philosophy of Right Cambridge: Cambridge University Press Henrich, J., Boyd, R., Bowles, S., Camerer, C., Fehr, E and Gintis, H (2004) Foundations of Human Sociality: Economic Experiments and Ethnographic Evidence from Fifteen Small-Scale Societies Oxford and New York: Oxford University Press Hodgson, G.M (2002) ‘The Evolution of Institutions: An Agenda for Future Theoretical Research’, Constitutional Political Economy, Vol 13, pp 111–127 Hodgson, G.M (2006) ‘What Are Institutions?’, Journal of Economic Issues, Vol 40:1, pp 1–25 Kantorowicz, E.H (1957) The King’s Two Bodies A Study in Mediaeval Political Theology Princeton, NJ: Princeton University Press Laezar, E (2000) ‘Economic Imperialism’, Quarterly Journal of Economics, Vol 115:1, pp 99–146 Mäki, U (2009) ‘Economics Imperialism: Concept and Constraints’, Philosophy of the Social Sciences, Vol 20:10, pp 1–30 McCloskey, D (2011) ‘Hobbes, Rawls, Nussbaum, Buchanan, and All Seven of the Virtues’, Journal des Economistes at des Etudes Humaines¸ Vol 17:1, pp 1–28 Nagel, T (1970) The Possibility of Altruism Princeton, NJ: Princeton University Press Nussbaum, M.C (2001) Upheavals of Thought The Intelligence of Emotions Cambridge: Cambridge University Press O’Neill, O (1996) Towards Justice and Virtues: A Constructive Account of Practical Reasoning Cambridge: Cambridge University Press Pareto, V [1916] (1963) The Mind and Society A Treatise on General Sociology New York: Dover Publications Pettit, P (1997) Republicanism A Theory of Freedom and Government Oxford and New York: Oxford University Press Pogge, T (2008) World Poverty and Human Rights: Cosmopolitan Responsibilities and Reforms Cambridge: Polity Weber, M [1921] (1978) Economy and Society An Outline of Interpretive Sociology Berkeley and Los Angeles: University of California Press Williams, B (1973) Problems of the Self Cambridge: Cambridge University Press Index Locators in italic refer to tables/figures accountability 12, 64, 66, 68, 70, 183 accounting profession 64–5, 69 action: neoliberal theory of 11, 38, 39; state see state roles actor-network theory 68 actors, social 61, 70 adaptation, biological perspectives 171–2, 175 administrative role of state 43 advertising, organizations 155 agency, state 53; see also freedom agents, economic 2, 6, 52, 70, 79–80, 83, 99: Austrian-Chicago comparisons 121, 123, 126, 128–31 aggregation 13, 14 Allais, Maurice 103 alienation 184 Americanization, mainstream economics 90–4; see also United States anthropological dimension 2, 8, 68–9, 195, 197–8; organizations 166; rational choice theory 114; systemic complexity 59; transition to neoclassical economics 78, 98 anti-trust doctrine 18, 147–52, 154, 164; see also trust apparatuses: governmental 5, 8, 30, 34, 35, 71; ideological Aristotle 11, 45, 103, 115, 128, 136, 199 Arrow, Kenneth 86, 100, 102, 132 ‘as-if ’ theories 15, 92 assumptions, role of 92 Austrian School of economics 18, 47–8, 86, 96; comparison with Chicago school 119–25, 126; rational choice theory 114–19 axiomatizations 13, 83, 85 Bachrach, Peter and Baratz, Morton 60 Bank of England 55 banking crisis (2007–08) 57, 194 Barnard, Chester I 179 Barone, Enrico 99 Becker, Gary, 20, 77, 85, 86, 92–3, 95, 119, 132–3, 146; human capital discourse 38, 39, 41; rationalism/ rational choice theory 114, 117, 118, 123, 124, 128–9, 170–1, 173, 186 behavioural economics 15, 19, 77, 80, 89, 92; Austrian-Chicago comparisons 121, 122; biological perspectives 175; Foucault on 33, 34, 36–41; neo-Marxist perspectives 52; rational choice theory 115, 116, 117, 118; scientific perspectives 91; state action and economy 54; systemic complexity 64, 67; see also psychological perspectives Bellamy, Edward 157 Bentham, Jeremy 81, 100, 115 Bentley, Arthur 156 Bergson, Abram 102 Bernoulli, Daniel 15 big business see corporations biological perspectives 198; adaptation 171–2, 175; organizations 172–9 biopolitics 5, 7, 8, 16, 159, 179; Foucault on 28–30, 32, 35; neo-Marxist perspectives 44, 45 Blumberg, Albert 101 Böhm-Bawerk, Eugene 123 Bork, Robert 146, 148 Boulding, Kenneth 86, 194 bounded rationality 15, 168, 169, 170, 179; see also economic rationality; rational choice theory 202 Index brain structure/function 176–8; see also cognitive perspectives Bretton Woods system 50, 55, 58–9 Buchanan, James 103, 134; and Tullock, Gordon 92 bureaucrats, neo-Marxist perspectives 48–9 Burnham, James 158–9 business schools 70 businesses see organizations calculation capacity 69–70; see also mathematical economics Callon, Michel 17, 68, 69, 70 Cannan, Edwin 84 Capitalism and Democracy (Friedman) 97, 164 capital, human 38, 39, 42, 117, 184 capitalist worldviews 1, 2, 7, 9, 10; neoMarxist perspectives 43–6, 48, 50–1; organizations 184; Polanyi vs Robbins 127; rational choice theory 130; state action and economy 52; systemic complexity 68; transnational capitalist class 49 Carnap, Rudoph 87, 88, 89, 101 Cartesian rationalism 121, 122, 123 Cassel, Gustav 84, 86 catallaxy 120, 136 causality discourse 13, 14, 83, 115 Chiapello, Eve: and Boltanski, Luc 183–4 Chicago School of economics 11, 12, 17, 18, 47–8; comparison with Austrian school 119–25, 126; organizations 147–8, 150–4, 159, 161; rational choice theory 114–19; systemic complexity 71; transition to neoclassical economics 87, 90–9 choice 5, 8, 62, 71–2, 113–14; Foucault on 38; organizations 179–85; systemic complexity 60, 62; see also preference; rational choice theory City of London/Treasury 55 civil society 43, 44, 47, 53, 98 Clark, Andy 177 class structures 49; see also elites classical economics, transition to neoclassical economics 78 classical liberalism 77, 198; definitions 124–5; organizations 164; return to values of 196; systemic complexity 68; transition to neoclassical economics 78, 96–7; see also below classical liberalism/neoliberalism distinction 2, 5–9, 11–12, 17; AustrianChicago comparisons 119, 120, 123–5; Foucault on 33–42; rational choice theory 40, 119, 120, 123–5, 126 classical political economics see political economy/economics Clinton administration 160 Coase, Ronald 9, 92, 103, 146, 147, 167, 179, 180 cognitive perspectives 176–8; economic model of rationality 15; neo-Marxist 46; organizations 169, 182 cold war 78 collective sphere 2–5, 9, 19, 171–4; Foucault on 30, 31, 33, 35, 41; neoMarxist perspectives 45, 46, 49; organizations 146, 155, 157; state action and economy 55 Collège de France lectures (Birth of Biopolitics by Foucault) 5, 7, 16, 28–9, 32, 38 commodification 9; fictitious commodities (Polanyi) 127, 129, 135 communication channels 45, 48; Austrian-Chicago comparisons 122; organizations 19, 155, 156, 165, 174, 180–1; scientific 66 communism 131, 164 community, Aristotle on 128 comparative statics 77, 86, 91 competition 149–51, 153–4, 157, 164–5, 182; Austrian-Chicago comparisons 121, 123; Foucault on 41, 42; neo-Marxist perspectives 44 complex society 4, 97, 125, 126, 127 complexity, systemic 2, 16–17, 59, 63, 64, 70–2; classic liberalism/neoliberalism distinction 33–6; neo-Marxist perspectives 48; state action and economy 53, 56, 57, 58, 59; transition to neoclassical economics 97 concurrence 41, 148, 149, 150 constructivist rationalism 124, 176 consumer behaviour 117–18; see also rational choice theory consumer theory 116, 117 consumer welfare 150–1 Contribution to the Critique of Political Economy (Marx) 43 cooperative actions 124, 175, 182, 197–8 corporate image 155, 157–8, 158 corporations 18–19, 48–51, 53, 54, 148, 152; American 147–8, 154–63, 165, Index 166, 172; Foucault on 37–8; thirteen commandments of neoliberalism 98; see also monopolies corporatism 157, 158, 160, 161, 162 cosmopolitanism, transnational capitalist class 49; see also elites cost-benefits analysis: Austrian-Chicago comparisons 123; rational choice theory 114–15; systemic complexity 59 Cournot, Antonie 64 Cours d’Economie Politique (Pareto) 80–1, 100, 109 Cowles Commission 101 creativity 44, 121 criminal law 98; see also legislation critical management studies 183 Croce, Benedetto 82–3 Croly, Herbert 157 cultural dimension of neoliberalism 5; biological perspectives 174, 176; elites 49; organizations 18, 154–6, 159, 183 curves, indifference 81–2, 116, 117, 194 customs 31 Darwinism 164, 179; see also evolutionary perspectives Davies, Will 8, Debreu, Gérard 22, 100 decision-making 195; organizations 168, 171, 179–85 see also choice deductive method 22, 81, 82, 88, 91, 93, 100, 102 definitions: catallaxy 120; classical liberalism 124–5; disembedded economy 126; economic good 84; economic principle 83; economic rationality/rationalism 116, 129; economic science 120; economics 77, 79, 84, 86–9, 92, 116, 118–19, 127–8, 172; economy 77, 78; efficiency paradigm 150; human capital 117; neoclassical economics 77; neoliberalism 1, 3, 6, 8, 33, 56, 114, 125; political economy 78, 156; positive economics 85; pure economics 78–9, 82; true liberalism 124 de-industrialization, western economies 51 demand side 80, 81 democratic rights 51, 57, 58 Demsetz, Harold 146 Derrida, Jacques 173 determinism, economic 118, 126, 127, 131; biological 175 Dewey, John 134 203 Dicey, Albert 96 Director, Aaron 95, 103, 146, 147, 148 disciplinary power 29, 30, 31, 41, 42; see also power structures disembedded economy 114, 126, 127, 130 division of labour 11, 14, 78, 79, 124 Dupré, John 175 ecological economics 13, 15, 176, 196 Econometric Society 86–7 econometrics 13, 14, 18, 78, 86–90 economic principle, definition 83 economic rationality 1–5, 9, 12, 16, 36, 100, 116–18; Austrian-Chicago comparisons 123, 124; bounded rationality 15, 168, 169, 170, 179; definitions 116, 129; Foucault on 32–40; neo-Marxist perspectives 52; organizations 161–2, 166, 167, 171–2, 181–2; Polanyi on 114, 125–31; scientific perspectives 94, 96, 99; state action 56, 58; systemic complexity 62, 69, 71, 72; transition to neoclassical economics 85, 96; see also rational choice theory economic science 61, 62, 82, 84, 93, 153, 167; definition 120; see also scientific perspectives Economic Sciences, Nobel Memorial Prize 117, 170 economics: definitions 77, 79, 84, 86–9, 92, 116, 118–19, 127–8, 172; Foucault on 32, 33; neoclassical see mainstream economics economies of scale 153, 165 economy, definitions 77, 78 efficiency paradigm 2, 12, 125, 193, 195; definitions 150; Foucault on 41; organizations 18, 150–1, 154, 161, 172, 183 Edgeworth, Francis Y 79, 80, 82, 116 Éléments d’Économie Politique Pure (Walras) 79 elites 48–51, 70, 154, 157, 195 embedded liberalism 55, 59, 126, 129, 166 emergence concept 122 Emory University, Los Angeles 146–7 emotional mechanisms 169, 197 employment, neo-Marxist perspectives 51 ends and means 16, 17, 33, 77, 79, 84, 89, 129 enterprise 39, 95, 155, 156, 164; Foucault on 37, 42; neo-Marxist perspectives 44, 46 204 Index entrepreneurs 38–9, 155; AustrianChicago comparisons 121, 123; scientific perspectives 91 environmental constraints 169, 170, 171, 176 epistemic nature of economics 13, 14, 45 equality/inequality 6–7; see also justice equilibrium theory see general economic equilibrium theory Essay (Robbins) 84, 90, 127 Essays in Positive Economics (Friedman) 14, 90, 91, 120, 134, 153 ethics 2, 4, 7–11, 14, 17, 193–9; classic liberalism/neoliberalism distinction 124; Foucault on 40, 41; rational choice theory 114, 115; systemic complexity 59, 60, 63, 72; thirteen commandments of neoliberalism 98; transition to neoclassical economics 79, 85; see also values/value judgments ethnography of organizations 19, 181–2 Eucken, Walter 95 euro-dollar market 55–6 evolutionary perspectives 122, 124, 198; organizations 164, 169, 170, 172–6, 178, 179 expected utility function 11, 14, 15, 79, 81, 102, 118, 168: rational choice theory 113, 121–2, 126, 129 experimental approach 13, 15, 16, 66, 81; see also scientific perspectives exploitation, workers/consumers 44, 97 fair price 81; see also price theory fallacy, economic 114, 126, 127, 135 fascism 130, 131, 135, 157–8 Feigl, Herbert 101 Feyerabend, Paul 196 financial crisis (2007–08) 57, 194 financialization of western economies 51 firms see organizations fixed-point theorem 86 flexible labour markets, neo-Marxist perspectives 44, 51 Fogel, Robert 92 formalism 13, 120, 127–8 Foucault, Michel 5–8, 16, 28–33, 172; classic liberalism/neoliberalism distinction 33–42; neo-Marxist perspectives 42, 44, 46, 47; organizations 182; state action and economy 52; systemic complexity 59, 63, 64, 71, 72 Foundations of Economic Analysis (Samuelson) 14, 90 free enterprise 95–6; see also enterprise free market 1, 6, 55–8; economic model of rationality 115, 121; organizations 161, 162, 164–6; scientific perspectives 94, 97 Free to Choose (Friedman) 98 free trade 6, 55 freedom, individual 7–12, 17, 18, 33, 113, 195–6; Austrian-Chicago comparisons 123, 126; classic liberalism/neoliberalism distinction 123; classical liberalism 125; Foucault on 29, 31, 32, 34, 40; neo-Marxist perspectives 44, 45; organizations 19, 148–9, 155, 159, 161; rational choice theory 114, 130–2; thirteen commandments of neoliberalism 98; transition to neoclassical economics 78, 94, 96–8 Friedman, Milton 85, 92, 102, 113, 118, 119, 124 146; Essays 14, 90, 120, 134, 153; on laissez faire policies 97–8, 152–3, 164; on neoliberalism 95–7, 125; positive economics 77, 90–1 Frisch, Ragnar 22–3, 86 full employment, neo-Marxist perspectives 51 gender identities 174 genealogical perspectives 36, 68, 71, 167 general economic equilibrium theory 12–14, 17, 114, 163; Austrian-Chicago comparisons 120; organizations 151, 152; rational choice theory 114, 116–18; scientific perspectives 77, 86–90; transition to neoclassical economics 77, 78, 80–2, 84–5, 90, 91 geometry 120; see also mathematical economics geopolitics 49, 52, 53, 54, 161, 165 Germany: historical school 89; Nazi 158; ordoliberalism 2, 96 Gide, Charles 80, 81, 95 Gigerenzer, Gerd 14, 15, 23 Glass-Steagall Act (1933) 160 global: elites see elites; governance 57, 166, 173; markets 57, 58, 59 globalization 48–56, 58; see also international relations goals: individual/collective 5, 9, 35, 171, 173; organizations 180, 182–3 good(s), economic 6, 84, 115, 120–1 Gordon, Colin Index government 2, 4, 5, 8, 32–3; interventions 29–30; organizations 156, 165–6 governmentality 7, 8, 16, 179; Foucault on 28–33, 35, 36, 42, 47; systemic complexity 60, 63; see also state roles Gramsci, Antonio 28, 36, 47–50 great transformation 114, 126, 195 Great Transformation, The (Polanyi) 125, 135 Grundsätze der Volkswirtschaftslehre (Menger) 79, 135; see also Principles of Economics (Menger) Haavelmo, Trygve 14 Hanna, Marcus Alonzo 157 Harvard school of economics 92 Harvey, David 6, 20, 94, 119 Hawtrey, Ralph 100 Hayek, Friedrich von 12, 17–18, 22, 48, 90, 93–9, 102–3, 114, 119, 124, 128, 133, 136, 149; Austrian-Chicago comparisons 120, 121, 123, 125; individual freedom 125, 131, 134 hedonism 81, 115, 116 Hegel, George W F 43, 47, 82, 195–6 hegemony 2, 51; neo-Marxist perspectives 47, 48, 49, 50; organizations 165; state action and economy 53, 55, 56, 58; transition to neoclassical economics 94, 99; transnational elite 49–50 Heiddeger, Martin 101 heterodoxy 14, 15, 95 heuristics 14, 15, 29, 37 Hicks, John R 12, 116 hierarchies 170, 180; see also power structures Hilbert, David 22; Hilbertism 102 historical perspectives 11, 17; AustrianChicago comparisons 119, 122; biological perspectives 173; Chicago school 94–9; general economic equilibrium theory/econometrics 86–90; individual freedom 130; organizations 150–1; transition to neoclassical economics 77–86, 90–4 Hobbes, Thomas 198 homo oeconomicus 38–41, 69, 114–17 Honegger, Hans household, Aristotle on 128 household production function 118 human action, neoliberal theory 11, 38, 39 205 human capital 38, 39, 42, 117, 184 human economy 127 human nature 4, 59, 173 human need, prerequisites of economic good 115, 120 human rights, neo-Marxist perspectives 51, 57, 58 Hume, David 123, 127 Hutcheson, Francis 123 identity: biological perspectives 173–4; national 154, 158, 159, 174 ideological perspectives 2, 3, 7, 18, 39, 40, 59 image, corporate 155, 157–8, 158 IMF see International Monetary Fund imperialistic economics 6, 14, 86, 92, 157, 194; definition 193; rational choice theory 117, 118, 129 indifference curves 81–2, 100, 116, 117, 132, 194 individual goals 5, 9, 35, 171, 173 individualism/individuality 12, 13, 79, 84, 93; false 121, 131; Foucault on 32–3, 35; rational choice theory 120–2, 126, 129, 131; true 121–2 see also choice; freedom inductive method 82 inequality/equality 6–7; see also justice innovation 5, 46, 121–3, 150, 153, 179, 184 Inquiry into the Nature and Causes of the Wealth of Nations (Smith) 34 institutionalism 77, 89, 90, 126 institutions 166–7, 169, 170; see also organizations instrumental value 11, 124 intentionality, organizations 149 interaction sites, organizations 19, 160, 166, 181–2 interest group liberalism 160 International Encyclopaedia of Unified Science 87, 88, 101 International Monetary Fund (IMF) 48, 53 international relations 16, 52–9 international standards 165 international trade 6, 10, 55, 98 intersubjectivity 178 interwar period 2, 17, 78–9, 83, 86, 90, 95, 126 intrinsic value 11, 195 invisible hand 115, 116, 131 Italian fascist movement 157–8 206 Index Japan, free market 56 JEL classification codes 16 Jevons, William 79, 103, 116 judicial power 43, 150; see also legislation; power structures; rule of law justice 2, 4, 6–7, 199; Foucault on 36; neo-Marxist perspectives 43; rational choice theory 114; thirteen commandments of neoliberalism 98; see also ethics Kahneman, Daniel and Tversky, Amos 15, 186 Kantorowicz, Ernst 199 Kaufmann, Felix 101 Keynes, John M 12–13, 22–3, 55, 119, 120 Kirzner, Israel 82, 122, 133–4 Kitch, Edmund 146, 147, 148 Knight, Frank 20, 23, 42, 60, 61, 90–9, 103, 118, 124, 127, 132 knowledge theory: Austrian-Chicago comparisons 123; Foucault on 30, 31, 32; neo-Marxist perspectives 48; systemic complexity 63, 65–6; transition to neoclassical economics 93; see also scientific perspectives Koopmans, Tjalling 13, 85–6 Kraft, Victor 101 Krugman, Paul 194 labour time 44, 184 laissez faire 6, 7, 96, 123, 161, 164; see also freedom Lakatos, Imre 22 Lange, Oscar 89, 99 Latour, Bruno 68 Lausanne Business School 80, 114–19 Lavoie, Don 14, 122 Law and Economics Center 146–7, 152 legislation 96, 98, 125; see also rule of law and see specific Acts by name leisure time, neo-Marxist perspectives 44 Leviathan (Hobbes) 198 Lewis, H Gregg 132 liberalism, embedded 55, 59, 126, 129, 166 liberty see freedom, individual Locke, John 12, 17 logic 83; of choice 114, 120 logical: actions 82; positivism 13 London School of Economics (LSE) 90, 93 London, City of 55 long term management capital 57 Lucas, Robert 23 Luhmann, Niklas 3, 17, 70, 71 Lukács, György 195 Machlup, Fritz 103 macroeconomics 12, 13, 14, 37 mainstream (neoclassical) economics 1, 2, 5, 11–12, 17, 19; econometrics 87; efficiency paradigm 18; organizations 152; transition to 77–86, 90–9 managerial discourse 9, 158–9, 163, 167, 179, 181–4 The Managerial Revolution (Burnham) 158 Manuale di economia politica (Pareto) 81, 82, 100, 116 March, James: and Herbert, Simon 168, 179 marginalism 113, 115, 116; distinction from classic political economy 79–80; transition to neoclassical economics 77, 78–80, 82, 85, 90 market efficiency see efficiency paradigm market equilibrium see general economic equilibrium theory markets/market economy 6, 9, 10, 11, 16; Austrian-Chicago comparisons 119–23, 126; Foucault on 32, 34, 35, 36, 38, 41; individual freedom 131; neo-Marxist perspectives 43, 47, 48, 51; organizations 148–52, 154, 159, 162–3; Polanyi vs Robbins 127; rational choice theory 114, 117; scientific perspectives 77; selfregulating 16, 57, 96, 127, 131; state roles 49, 50, 54, 59; systemic complexity 69; thirteen commandments of neoliberalism 98; transition to neoclassical economics 78; see also free market; global markets marriage metaphor, systemic complexity 63 Marschak, Jacob 101 Marshall, Alfred 22, 78, 79, 80, 92, 102 Marxism/Marx, Karl 7, 16, 35, 120; see also neo-Marxist perspectives Mathematical Colloquium 86 mathematical economics 67–8, 81, 89, 92; Austrian-Chicago comparisons 120; classic liberalism/neoliberalism distinction 124; rational choice theory 116; transition to neoclassical economics 81, 82, 83; see also econometrics; scientific perspectives Index maximization/maximizer individuals 2, 17, 77, 86, 91, 93, 193; AustrianChicago comparisons 121, 122, 124; Foucault on 39, 40, 41; organizations 151–3, 170, 171, 180, 181; rational choice theory 113–18; systemic complexity 62; thirteen commandments of neoliberalism 98–9 McCloskey, Deirdre 14, 136, 196 McLaren, Richard W 151 means and ends 16, 17, 33, 77, 79, 84, 89, 129 measurement without theory debate 13 Menger, Carl 79, 84, 93, 99, 102–3, 115, 119–23, 131 Menger, Karl 86, 94 Merton, Robert 118 metaphors: economic models 14; systemic complexity 63 metaphysics 59, 81, 83, 87, 173, 196 methodological transformations 77 methodology of economics 13, 14 Methodology of Mathematical Economics and Econometrics (Tintner) 88 microeconomics 37, 117 microfoundation of economic theory 13, 14, 117 Mill, John Stuart 22, 78–9, 115 Mirowski, Philip 1, 21, 23, 57, 67, 79, 94, 96, 98, 103, 118, 187 Mises, Ludwig von 18, 84, 85, 93, 96, 98–9, 102–3, 114, 119, 120–5, 133–4 models, economic 13, 14, 15; Foucault on 40; scientific perspectives 89; systemic complexity 60, 67 modern economics 194 monopolies 96–7, 98, 149, 152–54, 161, 165, 169; see also corporations Mont Pèlerin Society 11, 48, 94–6 Moore, Eliakim.H 90 Moore, John 146 moral philosophy 88 moral rationalism 124 morality see ethics Morgenthau, Hans 52 Morgerstern, Oscar 15, 22 Morris, Charles W 87, 88, 101 multinational corporations see corporations Myrdal, Gunnar 134 mystical reverence, for organizations 162–3 mythical narratives 4, 199 207 nation states 16, 34, 49, 51–8, 66, 68, 157, 161; see also state roles National Bureau of Research (NBER) 13, 34 national identities 154, 158, 159, 174 nationalism 157, 161, 162 natural selection 176; see also evolutionary perspectives Nazism 130, 158 need, prerequisites of economic good (Menger) 115, 120 neoclassical economics, definition 77; see also mainstream economics neoclassical synthesis 12 neo-Gramscianism 28, 47–50 neoliberalism: definitions 1, 3, 6, 8, 33, 56, 114, 125; organizational theory 162–72; strengths of 2; thirteen commandments of 98; see also classical liberalism/neoliberalism distinction neo-Marxist perspectives 28, 42–52 neo-positivism 79, 193 Neurath, Otto 87, 89, 90, 100, 101 New Deal 159 new liberal school 81 The New Republic (magazine) 157 niches, biological perspectives 176 Nietzsche, Friedrich 196 nihilism (virtuous) 196 Nobel Memorial Prize in Economic Sciences 15, 117, 170, non-logical actions 194 Northrop, Frye 127 Nozick, Robert 171–2 Nussbaum, Martha C 174; Sen-Nussbaum approach 195 objectivity 59, 64–6, 69, 81, 85, 89, 91; see also scientific perspectives oligopolies see monopolies open financial market see free market open-mindedness, and neoliberal worldview 10 opportunism 168, 169, 170 optimization under constraints 15 ordoliberalism, German 2, 95 organizations 9, 18–19, 146; biological perspectives 172–9; choice/decisionmaking 179–85; Foucault on 31, 38; neoliberal theory of 162–72; neoMarxist perspectives 44, 46; political role of 146–62; systemic complexity 70; taxation 51, 163 208 Index Pantaleoni, Maffeo 81, 95, 100 Pareto, Vilfredo 12, 17, 23, 78–84, 89, 92, 99, 100, 113, 116, 119–21, 162, 194, 195 Penrose, Edith T 179 performativity 4, 5, 17; Foucault on 31, 40; systemic complexity 64, 68, 70, 71 physics-based approach 14, 64, 67, 79, 81, 90, 91, 116; see also scientific perspectives Pigou, Alfred 84 poiesis/ praxis 45 Polanyi, Karl 18, 68, 100; economistic rationalism 128–30; formalism 127–8; individual freedom 130–2; prophecy 18, 114, 125–6, 134–6; rational choice theory 125–32, 126 Polanyi, Michael 95, 103, 136 police states 58 Principles of Economics (Jevons) 79 political economy/economics 1, 6, 7, 11–13, 17, 18, 195; definitions 78, 156; Foucault on 30, 33, 35; neo-Marxist perspectives 43; Polanyi on 125, 127, 128; rational choice theory 113, 115, 116, 119, 120; state action and economy 54, 56; systemic complexity 67; transition to neoclassical economics 77–90, 92, 93 political sphere: Foucault on 29, 32, 37, 41; neo-Marxist perspectives 43, 51, 52; organizations 18, 146–62, 151; systemic complexity 59 Polizeywissenschaft 33–4, 43, 63 Popper, Karl 89, 96, 101, 103 popularization of economics 90 population welfare 31–2, 34 Porter, T M 64, 65, 66–7 positive economics 13, 14, 61, 77, 79, 85, 89–93, 120 Posner, Richard 92, 134, 146, 148 postfordism 7, 45–6 postmodernism 179, 196 power structures 6, 28–33, 35, 43, 44, 60; Foucault on 16, 38, 40, 41; neoMarxist perspectives 43, 47–9; organizations 18, 19, 148, 149, 154, 164, 167, 180–2; state action and economy 52; United States 50 praxeology 121, 122, 125 predictive power, economic models 13, 91 preference 9, 19, 49, 77, 80–3, 85, 197; Foucault on 38; rational choice theory 113–16, 118, 121, 122, 126, 127, 178; systemic complexity 60, 62, 67; see also choice prerequisites of economic good 115 price theory 80, 81, 84, 93; AustrianChicago comparisons 120; organizations 148, 150, 163, 167 Principles of Economics (Marshall) 80 Principles of Economics (Menger) 93, 94, 123 privatization of public services 51, 163 procedures, systemic complexity 71, 72 The Process of Government (Bentley) 156 production, modes of 45 profit 34, 50, 51, 154 propaganda 18; corporate image 155, 157–8, 158 prophecy, Polanyi’s 18, 114, 125–6 Prospect Theory (Kahneman and Tversky) 15 psychological perspectives 15, 69, 71, 83, 92, 196; evolutionary 175, 176; rational choice theory 117, 118; see also behavioural economics public services, privatization 51, 163 public sphere 1, 29, 160, 167 pure economics 78–82, 84, 116 quantitative approaches, economic models 13 rational choice theory 5, 12, 14, 17–18, 113–14, 125, 193; Austrian-Chicago comparisons 119–25, 126; classical liberalism/neoliberalism distinction 40, 119, 120, 123–5, 126; Foucault on 37; homo oeconomicus 114–19; organizations 168, 169, 178, 179; Polanyi on 125–32, 126; systemic complexity 62, 69; transition to neoclassical economics 77, 78, 86 see also economic rationality reality, representations/construction of 36, 45, 65, 177–8 reciprocity 125, 128, 131 redistribution 131 Reidmaster, Kurt 101 religious reverence, for organizations 162–3 representative firm 80 republican tradition 198 revealed preferences 9, 113, 114 , 115, 116; see also preference rhetoric 14, 16; neo-Marxist 46 Index rights, democratic 51, 57, 58 risk taking 44, 57 Road to Serfdom (Hayek) 103, 131 Robbins, Lionel 12, 17, 33, 77, 79, 83–6, 89, 90, 92, 93, 95, 99, 100, 102, 103, 116, 118, 122, 134; Austrian-Chicago comparisons 120; formalism 127–8 Röpke, Wilhelm 96 rule-following procedures 71, 72 rule of law 31, 36–7, 42, 58, 125 Samuelson, Paul 14, 20, 77, 85, 90–2, 102, 113, 120 Santa Clara County v Southern Pacific Railroad case 154 satisficing behaviour 169, 170 Savage, Leonard 23 scarce resources/scarcity 85; AustrianChicago comparisons 120, 122; means and ends 16, 17, 33, 77, 79, 84, 89; rational choice theory 114, 129; see also maximization/maximizer individuals Schlesinger, Karl 86 Schlick, Moritz 101 Schultz, Theodore 132 Schumpeter, Joseph A 1, 84, 86, 90, 119, 121–3, 133 scientific perspectives, 2–3, 5, 12, 14, 17–18, 193; Austrian-Chicago comparisons 119–20, 120; Foucault on 37; general economic equilibrium theory/econometrics 86–90; neoMarxist perspectives 45; organizations 147, 150, 153, 154, 156, 158, 159; Polanyi on 127–8; rational choice theory 114, 116, 117, 118; systemic complexity 60–68, 70; think tanks 48; transition to neoclassical economics 77–86, 90–4, 96; see also economic science; objectivity Security, Territory, Population lectures (Foucault) 28 self-interest/selfishness 10–11; biological perspectives 175, 178; Foucault on 34, 35, 38; rational choice theory 115; systemic complexity 62; transition to neoclassical economics 98; see also rational choice theory self-realization 46, 182, 184 self-regulating markets 16, 57, 96, 127, 131 Shaftesbury, Anthony A.C 123 Sherman Act (1890) 148, 150 209 Simon, Herbert A 23, 168, 169, 170, 179, 181, 182, 183, 186–7 Simons, Henry C 6–7, 21, 95, 97, 103, 152, 154 Sloan, Alfred 159 Smith, Adam 34, 35, 78, 79, 99, 115–16, 131, 132 social complexity 35, 61, 70, 195; see also complexity, systemic social Darwinism 164, 179 social engineering 64, 96 social justice see justice social perspectives: constructions of reality 36, 45, 65; markets 119, 122–3; organizations 19, 153, 155, 156, 161, 166, 172, 183 social utility function 113, 122, 132 socialism 96, 131 socialization, Foucault on 34 sociobiology 173; see also biological perspectives solipsism 127 sovereignty 28–30, 49, 53, 54, 57–8 Soviet Union/Stalinism 130, 131 Spencer, Herbert 127 spontaneous order 97, 120, 122, 124, 125, 126 stable preferences 77, 114, 118 standards, international 165 state roles 6, 19, 29, 31; and corporations 48; and economy 52–9; markets 49, 50; neo-Marxist perspectives 43, 46, 47, 48; organizations 161, 162; thirteen commandments of neoliberalism 98; see also government statics, comparative 77, 86, 91 statistics 13–14, 88 Stigler, George 15, 85, 92–5, 99, 102, 103, 117–19, 121, 125, 132, 134, 146, 153, 164, 185, 186 Stiglitz, Joseph 125, 194 stochastic models 14 Straight, Willard 157 Streissler, Eric 119 subjectivation 9, 19; Foucault on 29, 38, 39; neo-Marxist perspectives 46; organizations 179, 183 subjective theory of value 83 subjectivism 79, 80, 84, 85; AustrianChicago comparisons 122; rational choice theory 115, 116; transition to neoclassical economics 94 supply side 80, 81 supranational agencies see corporations 210 Index survival of the fittest 164, 179; see also evolutionary perspectives survivor technique 153 sympathy 34 systemic complexity see complexity, systemic taste, personal 196; see also preference taxation 6; organizations 51, 163 technical measures, systemic complexity 59, 63 technicalities 84 teleocratic (purposed-governed) social order 125 Theory of Moral Sentiments (Smith) 34 thermodynamics analogy 91 think tanks 48 thirteen commandments of neoliberalism 98–9 Tinbergen, Jan 23, 88 Tintner, Gerhart 87, 88–9, 90, 102 tort law 98 totalitarianism 18, 19, 72, 78, 95, 97 trade, international 6, 10, 55, 98 trade unions 51 transaction costs theory 167, 168, 169 transnational capitalist class see elites transnational corporations see corporations Trends of Economic Ideas (Honegger) true liberalism 96; see also classical liberalism trust 10, 18; see also anti-trust doctrine truth 2; Foucault on 39–40; systemic complexity 59, 64 unbounded rationality 15; see also bounded rationality uncertainty 12, 42, 71, 123 unified science 87–9, 101, 118, 193 Unity of Science Movement 88 uniformity 83 United States 18, 64, 95, 193; corporations 147–8, 154–63, 165, 166, 172; general economic equilibrium theory/econometrics 87, 89; neoMarxist perspectives 49, 50; state action and economy 55, 56, 58; transition to neoclassical economics 77, 78, 90–4; see also Chicago school universality 36–7 University of Chicago 92, 94; see also Chicago School of Economics utilitarianism 80, 114–15, 116 utility theory 17, 80, 81, 115; AustrianChicago comparisons 121; economic models 11, 14, 15; individual freedom 131; organizations 168, 170; rational choice theory 116, 129 value, creation of 43, 44, 45, 81, 83 values/value judgments 2, 7–8, 9, 11, 194–7; Foucault on 40; organizations 154, 155, 157; rational choice theory 116; systemic complexity 60, 61; transition to neoclassical economics 78; see also ethics Veblen, Thorstein 80 Vienna, interwar see Austrian School of Economics virtue, theory of 199 von Neumann, John 23, 86, 100; and Morgerstern, Oscar 15, 22 Wabash College lecture (Friedman) 97 Wald, Abraham 15, 22, 86, 100 Walras, Leon 14, 23, 64, 79, 80, 81, 86, 103 115, 116, 119, 120, 133 Walter Lippman Colloquium Washington Consensus 54 Weber, Max 1, 7, 8, 65, 70, 120, 124, 133–4, 195 welfare economics 84; consumer 150–1; population 31–2, 34; rational choice theory 113; role of the market 122; systemic complexity 59, 60, 61, 62 welfare state 51, 58 Weltanschauung 1, 59, 119, 162, 182 Wertrationalität 8, 195 western economies 2, 11, 17, 51, 78 Williamson, Oliver 77, 163, 168, 169, 170 Wilson, Edward 173 win-win game 18 World Bank 48, 53 World Trade Organization (WTO) 53 Zilsel, Edgar 88, 101; and De Santillana, Giorgio 88 Zweckrationalität 8, 195 ... how liberals and neoliberals conceive of the origins and functions of the market Despite their professed faith in the self-regulative capability of the market, the supporters of neoliberalism. .. society, and has been heavily discussed in both academia and the media In The Origins of Neoliberalism, the joint effort of an economist and a philosopher offers a theoretical overview of both neoliberalism s... example of the description of the process of debunking economics from individual liberty that led to a reduction of freedom On this specific issue, the role of the Austrian school of economics