Markets vs. contract: Butler (1989: 119) notes that the standard form contract ‘reduces the transaction and negotiating costs of reaching and adhering to optimal contracts’. Contract law is, in this sense, central to neoliberalism because it enables the extension of market-like relations – or, more accurately, contractual ones – to all areas of society; without standard contracts, transaction costs would militate against the extension of market-like arrangements. This conflicts, however, with the idea that the market is the best or should be the central mechanism for coordinating either society or the firm. If the market was the best or only mechanism needed, then there would be no need for contract law. However, the latter is crucial for ensuring transactions can and do happen without too high a cost. More critically, the more that our social relations are converted into market-like interactions, the less efficient the market will be unless those interactions are reduced to standard and non-negotiable contracts; this is hardly the basis for liberty or choice.
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There are at least two reasons why it is difficult to either identify or agree on one version of neoliberalism. First, neoliberalism has a complex, shifting and often contradictory intellectual history stretching back to the 1930s (if not before). Neoliberalism emerges from a range of disparate strands of (new) liberalism – most of which had rejected the discredited laissez-faire version dominant in nineteenth-century Britain. Early work on neoliberalism by Michel Foucault (2008), for example, identified two schools of neoliberalism: the Freiburg (or ordoliberal) School and the Chicago School. The key difference between the two is their position on the role of the state in ordering (Freiburg) or interfering (Chicago) with markets (Siems and Schnyder, 2014). There is a long history to these differences that belies this simple characterization – those interested in these details should read Friedrich (1955), Foucault (2008), Gerber (1994), and Siems and Schnyder (2014), amongst others. The evolution of these distinct schools of neoliberalism could not be more different; on the one hand, the Freiburg School was pivotal in the founding of the German social market economy – the epitome of coordinated capitalism – while, on the other hand, the Chicago School is implicated in the emergence of Anglo-Saxon free market capitalism (Gerber, 1994; Siems and Schnyder, 2014). It is possible to argue that while both schools emerged from a similar critique of laissez-faire, they eventually diverged as their epistemic arguments evolved. For example, the Freiburg school maintained its conception of markets as social constructs, while later Chicago School thinkers shifted more towards the view that markets are natural, emerging from a liberal notion of the freedom to contract rather than from government fiat (see Bowman, 1996).
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Neoliberalism has an interesting history when it comes to perceptions of business monopoly. Almost all neoliberals, from whatever school of thought, were opposed to any form of monopoly – private or public – up until the 1950s and 1960s. This is evident across the board in the writings of ordoliberals like Alexander Rustow and Wilhelm Ropke (Burgin, 2012); early Chicagoans like Jacob Viner and Henry Simons (ibid.); later Chicagoans like Friedman (1962; see Peck, 2010); and Austrians like Hayek (1944/2001; 1960/2011). These early neoliberals had a negative view of private monopoly as distorting market competition, on which their epistemology and normative claims rested. However, the attitude of later Chicago School neoliberals changed quite dramatically from the 1950s. According to van Horn (2009; 2011) and van Horn and Mirowski (2009) this change in attitude resulted from two major projects undertaken at the University of Chicago in this period: the Free Market Study (1946-1952) and the Anti-Trust Project (1953-1957). These projects went beyond the economics department, and were led by or involved academics from the law (e.g. Aaron Director) and business (e.g. George Stigler) schools. They de-problematized private monopoly in the eyes of Chicago School neoliberals, although not those of other neoliberals; for example, ordoliberals never reversed their position on monopoly (Gerber, 1994). According to Siems and Schnyder (2014: 383), private monopoly was ‘accepted as a legitimate form of economic organization’ because Chicago thinkers argued that monopoly was, by definition, always ‘a transitory phenomenon, which will ultimately be eroded by market forces’. Evidence for this expectation, however, is not supported by subsequent events, as outlined below.