Page 36 - Šolsko polje, XXIX, 2018, no. 1-2: The Language of Neoliberal Education, ed. Mitja Sardoč
P. 36
šolsko polje, letnik xxviii, številka 5–6
Eücken sought to chart the basic principles of ‘economic politics’
[Wirtschaftspolitik] in order to establish the ‘conditions’ for a competitive
market order to arise and continue. Establishing competition as the cor-
nerstone of the economy became the key principle of a neoliberal order. It
was concerned not with ‘interfering’ with the day-to-day processes of the
economy, but seeking to establish and protect the ‘conditions’ that were
favourable to an effective and efficient economic system. As Eücken put it,
“[t]he answer is that the state should influence the forms of economy, but
not itself direct the economic process” (p. 95).
It was also supported amongst the US free market advocates, such
as Henry Calvert Simons. As ‘father’ of the Chicago School of free mar-
ket economics, Simons was expected to champion a consistently tradi-
tional approach accepting the classical postulates of laissez-faire. This was
as a natural equilibrium between supply and demand which ensured the
‘self-regulation’ of the economy, as if directed, in Adam Smith’s phrase,
by an ‘invisible hand’, i.e., laws of nature. Yet, in his pamphlet, A Positive
Program for Laissez-Faire, Simons seems ambivalent over laissez faire:
The representation of laissez-faire as a merely do nothing policy is unfortu-
nate and misleading. It is an obvious responsibility of the state under this
policy to maintain the kind of legal and institutional framework within
which competition can function effectively as an agency of control. The
policy should therefore be defined positively, as one under which the
state seeks to establish and maintain such conditions that it may avoid
the necessity of regulating ‘the heart of the contract’ – that is to say, the
necessity of regulating relative prices. Thus, the state is charged, under
this ‘division of labor’, with heavy responsibilities and large ‘control’
functions: the maintenance of competitive conditions in industry, the
control of the currency … the definition of the institution of property …
not to mention the many social welfare functions. (Simons, 1947: p. 42)
Indeed, Ronald Coase was so shocked at Simons pamphlet that
he questioned Simon’s credentials as a classical liberal and free market
advocate:
I would like to raise a question about Henry Simons … [His] Positive Pro-
gram for Laissez-Faire … strikes me as highly interventionist pamphlet …
[I]n antitust, [Simons] wanted to … restructure American industry…. In
regulation … he proposed to reform things by nationalization … I would
be interested if someone could explain … (cited, Kitch, 1983: pp. 178–79)
Coase maintains that Simons’ Positive Program constitutes a blue-
print for intrusive state interventions in the market of the sort advocated
34
Eücken sought to chart the basic principles of ‘economic politics’
[Wirtschaftspolitik] in order to establish the ‘conditions’ for a competitive
market order to arise and continue. Establishing competition as the cor-
nerstone of the economy became the key principle of a neoliberal order. It
was concerned not with ‘interfering’ with the day-to-day processes of the
economy, but seeking to establish and protect the ‘conditions’ that were
favourable to an effective and efficient economic system. As Eücken put it,
“[t]he answer is that the state should influence the forms of economy, but
not itself direct the economic process” (p. 95).
It was also supported amongst the US free market advocates, such
as Henry Calvert Simons. As ‘father’ of the Chicago School of free mar-
ket economics, Simons was expected to champion a consistently tradi-
tional approach accepting the classical postulates of laissez-faire. This was
as a natural equilibrium between supply and demand which ensured the
‘self-regulation’ of the economy, as if directed, in Adam Smith’s phrase,
by an ‘invisible hand’, i.e., laws of nature. Yet, in his pamphlet, A Positive
Program for Laissez-Faire, Simons seems ambivalent over laissez faire:
The representation of laissez-faire as a merely do nothing policy is unfortu-
nate and misleading. It is an obvious responsibility of the state under this
policy to maintain the kind of legal and institutional framework within
which competition can function effectively as an agency of control. The
policy should therefore be defined positively, as one under which the
state seeks to establish and maintain such conditions that it may avoid
the necessity of regulating ‘the heart of the contract’ – that is to say, the
necessity of regulating relative prices. Thus, the state is charged, under
this ‘division of labor’, with heavy responsibilities and large ‘control’
functions: the maintenance of competitive conditions in industry, the
control of the currency … the definition of the institution of property …
not to mention the many social welfare functions. (Simons, 1947: p. 42)
Indeed, Ronald Coase was so shocked at Simons pamphlet that
he questioned Simon’s credentials as a classical liberal and free market
advocate:
I would like to raise a question about Henry Simons … [His] Positive Pro-
gram for Laissez-Faire … strikes me as highly interventionist pamphlet …
[I]n antitust, [Simons] wanted to … restructure American industry…. In
regulation … he proposed to reform things by nationalization … I would
be interested if someone could explain … (cited, Kitch, 1983: pp. 178–79)
Coase maintains that Simons’ Positive Program constitutes a blue-
print for intrusive state interventions in the market of the sort advocated
34
