Authoritarian Liberalism in Europe:
A Common Critique of Neoliberalism and
Ordoliberalism
Michael A Wilkinson
London School of Economics Law Department
Abstract
The differences between ordo and neoliberalism are many and varied. They
include significant temporal and spatial differences, ascending in distinct places
and periods of state transformation and capitalist development. They also include
institutional and ideational differences: ordoliberalism is associated with rigid
anti-majoritarian and pro-competitive rule-based institutions, in a primarily
domestic context, neoliberalism with a looser set of political interventions
directing class and geopolitical conflicts, domestically and imperially. This paper
suggests, however, that within the constitutional dynamic of European integration
and postwar reconstruction, ordo- and neo-liberalism represent a single
movement: a conflation of political authoritarianism and economic liberalism in
opposition to democracy and especially in opposition to democratic constituent
power.
Keywords
Authoritarian Liberalism; Ordoliberalism; Neoliberalism; European Integration;
Constitutional Imagination
Introduction
The differences between ordo- and neo-liberalism are many and varied. They
include significant temporal and spatial differences, ascending in distinct periods
of state transformation and capitalist development. They also include
institutional and ideational differences: ordoliberalism is associated with rigid
anti-majoritarian and pro-competitive rule-based institutions, in a primarily
domestic context, neoliberalism with a looser, discretionary set of political
interventions directing class and geopolitical struggles, domestically and
imperially. I would like to suggest, however, that within the constitutional
dynamic of European integration and postwar reconstruction, ordo- and neo-
liberalism represent a single movement: a conflation of political authoritarianism
and economic liberalism in opposition to democracy and especially in opposition
to democratic constituent power.
The dynamic of authoritarian liberalism is evident throughout the recent Euro-
crisis, with politically authoritarian forms of governing emerging at national and
supranational level in defense of programmes of economic liberalism, especially
within the Eurozone (Wilkinson, 2013). Similar phenomena have been labelled
‘authoritarian neo-liberalism’, grouping together recent critical conjunctures in
Latin America and Southeast Asia, often under the auspices of the so-called
‘Washington consensus’ in international affairs (Bruff, 2014). In each of these
contexts, principles associated with democracy and social rights are subsumed by
a mode of governing that operates in accordance with capital accumulation,
marketization and economic rationality.
The constitutional background to the Euro-crisis response is a mix of ordoliberal
principles entrenched at the Treaty of Maastricht (price stability, fiscal discipline,
avoidance of moral hazard), neoliberal political economic strategy pushed
through conditionality programmes (austerity, privatization, deregulation) and
ideological commitment to the European project (‘if the Euro fails, Europe fails’).
As a matter of legal and political form, ordoliberalism and neoliberalism are often
in tension with each other, as ordoliberalism’s rule-based commitments come up
against neoliberal discretionary politics. But they are not in basic opposition, at
least from the perspective of a constitutional theory that takes democracy
seriously. On the contrary, a common denominator is the elision or repression of
any democratic alternative to economic liberalism in general and austerity in
particular. This is maintained in practice by a third factor: the material and
ideological pressure to remain within the Euro-regime itself and the lack of any
alternative political vision.
The Maastricht settlement is now coming to a head as the pressure placed on
elected domestic governments (often self-imposed or imposed by other branches
of the state or regional state-system) to remain within the single currency is
increasingly matched by counter-pressure to leave in order to regain monetary
authority. Italy is the latest Member State in which this stress is provoking
constitutional crisis, with no apparent way out. And the basic dynamic affects
creditor as well as debtor states, with anti-systemic parties and movements on the
rise in Germany and France. The underlying tension, however, is not, as some
argue, merely a temporary one linked to a period of economic emergency; on the
contrary, it is hard-wired into the postwar constitutional settlement in Europe.
The aim of the Euro-crisis measures is not to enable a future return to normal
democratic politics, but to restore the pressure of the financial markets and the
constraints imposed by them, reinstating by different means the same constraints
(conditionality) now imposed through political coercion and institutional devices
such as the European Stability Mechanism and the Outright Monetary
Transactions of the ECB. The last decade of crisis response can be viewed as
having effected, in practice, a conservative revolution: bypassing and
circumventing normal parliamentary, democratic and legal accountability in
order to conserve a liberal economic regime.
The deep constitution of this conjuncture can be explored by considering the
longer pedigree of the confluence of political authoritarianism and economic
liberalism (Wilkinson, 2017). German Social Democrat and constitutional theorist
Hermann Heller coined the term ‘authoritarian liberalism’ in the interwar period
(Heller, 2015), targeting with the label not only the centrist and conservative
Cabinets of Chancellor Brüning that governed Germany before the Nazi party took
power, but also the constitutional theorist who had advised them, Carl Schmitt
(Bonefeld, 2017). Schmitt had recommended a strong state in order to defend the
free market economy against the threat of democratic socialism and associated
experiments of economic democracy, encapsulated in his address to the
Langnamverein in 1932, ‘strong state, free economy’ (Cristi, 1998). This motto
would be taken up and reformulated by the ordoliberals, who stressed not only
the dangers of unfettered democracy but of unfettered capitalism and its tendency
to self-destruct by leading to monopolies and cartels. The state needed to be
strong to secure the legal and institutional conditions (the ordo) of the free market
and disarm both democratic and capitalist threats to it.
The polemic between Heller and Schmitt took place in the crucible of late Weimar,
as it was teetering on the brink of collapse. But with a longer historical arc in view,
the combination of political authoritarianism and economic liberalism comes to
appear less exceptional than normal. As Karl Polanyi argued, the pattern of
authoritarian liberal response and reaction to economic crisis was far from unique
to Weimar – right across the globe, states tried to maintain the political-economic
demands of the Gold Standard, fiercely resisting social democratic movements
through exceptional measures, until, eventually but unevenly, they abandoned
Gold, and market liberalism, leading, for example, to Welfarism in Britain and the
New Deal in the US (Polanyi, 2001 [1944]). According to Polanyi, the more fiercely
countries resisted social democracy through authoritarian government in the
name of economic liberalism and sound finances, the stronger and fiercer the
eventual backlash (the ‘double movement’). Authoritarian government hollowed
out democracy, ultimately weakening its ability to respond to the Fascist threat
when it arrived. It was, in other words, authoritarian liberalism that directly
prepared the ground for Fascism.
1
Polanyi’s account opens up a broader point about the backdrop to the interwar
conjuncture. The authoritarian state on which the defence of the interests and
ideas of economic liberalism depended made its mark not only in the crisis
response of the 1920’s and 30’s but in the initial forging of the market society
across the nineteenth century. The market society was not spontaneous but
planned and often coercively implemented using a strong, authoritarian state
apparatus.
Taking a similar tack, the argument here is that authoritarian liberalism signifies
not only the exception, the crisis response, but also the norm, the postwar
European constitutional state and regional order. This is reconstituted from the
beginning in an authoritarian vein in order to restore and maintain economic
liberalism after its interwar collapse. The project of European integration plays a
significant role in this restoration, beginning with the supranational institutions
of the Paris and Rome Treaties. But it is a domestic as much as a regional
reconfiguration.
This new brand of authoritarianism reflects the reaction of political elites (as well
as large sections of the people themselves) to the fear of a democratic- and class-
consciousness that was unleashed in the interwar period and that remained a
threat to the stability of a liberal order. Although this postwar settlement has been
captured by the label of ‘restrained democracy’, or even the inappositely named
‘militant democracy’, these labels conceal a de-democratisation of the political
process, with matters taken out of the hands of ordinary democratic politics in
order to promote political and economic stability (Müller, 2011). Indeed, the West
German case represents a de-politicisation (qua de-democratisation) not only of
ordinary politics but also of constitutional politics with its entrenched Basic Law
and conservative constitutional culture, closely guarded by a Constitutional Court.
It is from this perspective that we can see the neoliberal state of the 1970’s and
the recent austerity state of the financial crisis to represent a deepening rather
than a departure from the authoritarian liberal trajectory of postwar state
transformation.
2
The purpose of this contribution is thus to suggest that despite important
differences between ordoliberalism and neoliberalism, regarding, for example,
their temporal arcs, ideological-institutional supports and geopolitical
orientations, there is a constitutionally significant common denominator. In short,
what may appear a conjunctural turn to political authoritarianism in the
exceptional moment of economic emergency is rather a reflection of a deeper
systemic feature of the prevailing postwar liberal order in Europe. This order is
now in crisis, struggling to maintain the ‘extreme centrism’ it depends on for
political support.
As yet, there has been no rupture from this postwar order but there is increasingly
an inflection, where authoritarian liberalism is mixed with aspects of
authoritarian illiberalism, particularly with regard to issues of identity and
immigration as right-wing nationalism returns. This is occurring within the
European Union, most evidently in Central and Eastern Europe but also in the
core, such as in Italy. Brexit may follow this inflection. But if it were to signify a
rupture with the postwar order of authoritarian liberalism, it would be through a
reclaiming of democratic sovereignty over the economy. It is, however, too early
to tell where Brexit will lead.
Militant Democracy, Restrained Democracy or Authoritarian Liberalism?
The crisis of the constitutional state in late Weimar Germany was a feature not
only of the political and economic turbulence associated with reparations, war
guilt and the Versailles Treaty. It was also a feature of domestic class struggle,
predominantly between a class-conscious and politically emancipated working
class and an anti-democratic and embittered ruling class. This threatened the
political economic order guaranteed in the 1919 Constitution, which promised to
protect economic liberalism as well as the social state, posing a dilemma well
understood by its architect, Hugo Preuss (2000). Above all, it was the anti-
democratic stance of political and economic elites that seriously hindered the
long-term prospects of the Weimar Republic (Kershaw, 1990). The reaction of the
governing elites and industrialists of the early 1930’s to the political and economic
instability, rendered more acute by the depression, was a combination of
authoritarianism and economic liberalism. This configuration was identified by
Heller and Polanyi as crucial to the collapse of Weimar (Heller, 2015 [1932];
Polanyi, 2001 [1944]). In their analysis, it was the capitalist market system and its
material inequalities that ultimately undermined democracy and laid the path to
the Fascist takeover.
Yet the message taken by mainstream constitutional theory in response to the
extraordinary double movement and breakdown of liberal democracy it entailed
in Germany (and elsewhere) would be quite different from the one Heller and
Polanyi had conveyed. It was not the threat that capitalist inequality posed to
democracy that resonated in the liberal constitutional imagination, but the threat
that democracy posed to liberalism. The underlying concern was that democracy
in general and the democratic constituent power in particular would erode or
overturn liberalism and the constitutional order that undergirded it. This concern
came to prominence through the work of another constitutional theorist of the
period, who had emigrated to the US, but became closely involved in post-war
German reconstruction, Karl Loewenstein. Loewenstein, writing in 1935, thought
that liberal democracy needed to be more ‘militant’ in the fight against Fascism
(and, if to a lesser extent, also against Communism) (Loewenstein 1935, 1937).
The structures of the Weimar republic should have been more flexible in order for
it to defend itself, by suspending constitutional rights, banning political parties,
and preventing the rise of extremist groups and associations. Lowenstein,
describing the opportunism of the Fascist opponents of the constitution, urged
liberal democracy to pre-empt them, to take the fight to its enemies, to ‘fight fire
with fire’ (Loewenstein, 1937: 432). This echoed Carl Schmitt’s own earlier call for
robust defence of the Weimar constitution, by dictat and decree if necessary.
In the aftermath of World War II, mainstream political and constitutional theory
thus became preoccupied with liberal constitutional defence, Loewenstein’s
warning apparently heeded. This narrow attention to constitutional form,
however, elided the sociological examination of the power structures and social
inequalities that undermined democracy in a capitalist state and state-system. The
West German practice of entrenching strong constitutional guarantees to protect
individual rights became increasingly influential and widespread (however
misleading the conventional narrative of the dignified reaction to Nazism
(Hailbronner, 2015). Constitutional lawyers, and those tasked with designing
legal and political institutions, were dedicated to the justification of various
institutional arrangements – whether domestic, international or supranational –
that would constrain majoritarianism, with the rationale (or pretext) of
preventing democratic backsliding or avoiding democratic irrationality.
Independent technocratic institutions such as constitutional courts, expert
commissions, and central banks, became the norm, and were gradually engrained
in the liberal constitutional imagination. European integration was an intrinsic
part of this post-war settlement, representing the construction of a ‘militant
democracy writ large’, a project generated by administrative and bureaucratic
processes rather than democratic energies. The role of the European Court of
Justice in conjunction with domestic courts in pushing forward integration-
through-law would be central to the success of the project (Wilkinson, 2017).
Jan-Werner Müller, with the label of ‘restrained democracy’, offers a more
accurate assessment of this set of phenomena than suggested by the inappositely
named ‘militant democracy’ (Müller, 2011). Müller shows how it was liberalism