Hostname: page-component-7bb8b95d7b-qxsvm Total loading time: 0 Render date: 2024-10-05T14:30:14.072Z Has data issue: false hasContentIssue false
  • English
  • Français

Neoliberalism and Law: The Case of the Constitutional Balanced-Budget Amendment

Published online by Cambridge University Press:  06 March 2019

Thomas Biebricher

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

This Article discusses the significance of law in neoliberal theory and practice. Prefaced by a brief look at the role that law plays in the theories of the ordo- and neoliberal thinkers Franz Böhm and Friedrich August von Hayek, the subsequent chapters focus on the work of James Buchanan and his brand of neoliberalism, which combines constitutional economics public choice theory. Buchanan's core demand is a balanced-budget amendment to the constitution. The following Sections examine this measure in its various aspects before the final section switches to the world of “actually existing neoliberalism” with a discussion of the various reforms of the economic governance structure of the European Union in recent years, particularly the “Fiscal Compact”, which amounts to the real world equivalent of a balanced-budget amendment.

Type
Research Article
Information
German Law Journal , Volume 17 , Issue 5: Special Issue Democracy and Financial Order , 01 October 2016 , pp. 835 - 856
Copyright
Copyright © 2016 by German Law Journal, Inc. 

References

1 Libertarianism is more prevalent in the United States, while it is rarely even mentioned in political discourse in Europe.Google Scholar

2 See generally Peck, Jamie, Remaking Laissez-Faire, 32 Progress Hum. Geography 3 (2008); Ben Jackson, At the Origins of Neoliberalism: The Free Economy and the Strong State, 53 Hist. J. 53 129 (2010).Google Scholar

3 Jamie Peck, Constructions of Neoliberal Reason 51 (2010).Google Scholar

4 See 5 Friedrich A. von Hayek, Liberalismus, in Grundsätze einer liberalen Gesellschaftsordnung: Aufsätze zur Politischen Philosophie und Theorie 88–119 (Viktor Vanberg ed., 2002) [hereinafter von Hayek, Liberalismus].Google Scholar

5 Friedrich A. von Hayek, The Road to Serfdom 18 (1944) [hereinafter von Hayek, The Road to Serfdom]; Buchanan, James M. & Musgrave, Richard A., Public Finance and Public Choice: Two Contrasting Visions of the State 83 (1999).Google Scholar

6 Franz Böhm, Walter Eucken & Hans Grossmann-Doerth, The Ordo Manifesto of 1936, in Germany's Social Market Economy: Origins and Evolution 15–16 (Alan Peacock & Joachim Willgerodt eds., 1989).Google Scholar

7 Id. Google Scholar

8 Id. at 23.Google Scholar

9 Id. Google Scholar

10 Id. Google Scholar

11 Franz Böhm, Rule of Law in a Market Economy, in Germany's Social Market Economy: Origins and Evolution, supra note 6, at 57 [hereinafter Böhm, Rule of Law in a Market Economy].Google Scholar

12 Franz Böhm, Das Problem der privaten Macht: Ein Beitrag zur Monopolfrage, in Grundtexte zur Freiburger Tradition der Ordnungsökonomik 49–67 (Nils Goldschmidt & Michael Wohlgemuth eds., 2008).Google Scholar

13 Böhm, Rule of Law in a Market Economy, supra note 11, at 53.Google Scholar

14 Id. Google Scholar

15 Id. at 49.Google Scholar

16 Id. Google Scholar

17 See 1 Friedrich A. von Hayek, Law, Legislation, Liberty: Rules and Order 94–144 (1973). A more encompassing exposition would also have to address the distinction between thesis and nomos that von Hayek discussed at length in Law, Legislation and Liberty. Nomos concerns the rules of conduct and is often equated with private law by von Hayek, while thesis is public law explicitly set by legislatures. In his diagnosis of the decline of the rule of law, the problem is clearly thesis and not nomos. Google Scholar

18 Friedrich A. von Hayek, The Constitution of Liberty 185 (1960) [hereinafter von Hayek, The Constitution].Google Scholar

19 Id. at 182.Google Scholar

20 Id. at 202.Google Scholar

21 Id. at 203.Google Scholar

22 James Buchanan is a particularly interesting neoliberal thinker because of the unique combination of ingredients to his thought. He was trained as an economist at the University of Chicago but then went on to pursue an original research agenda that contributed to the establishment of public choice theory as well as constitutional economics. Both theories are key influences for some contemporary varieties of neoliberal thought. In the present context, his significance derives from his focus on public finance and his specific approach to reining in fiscally undisciplined states and governments.Google Scholar

23 See Buchanan, James & Wagner, Richard, The Political Biases of Keynesian Economics, in Fiscal Responsibility in Constitutional Democracy 79–100 (James Buchanan & Richard Wagner eds., 1978). Two prominent examples of countries, in which such amendments have been introduced, are Germany and Switzerland. The technical specifics differ in both cases. In Germany, the crucial parameter is net borrowing, which must remain below 0.35 per cent of GDP. In Switzerland, revenue and expenditure have to be kept in balance. Buchanan seems to have in mind the latter version: “With a balanced budget rule, any proposal for expenditure must be coupled with a proposal for taxation.” Id. at 89.Google Scholar

24 James Buchanan, The Constitution of Economic Policy, 77 Am. Econ. Rev. 243 (1987); See Hayek, supra note 4, 88–119.Google Scholar

25 See for example James Buchanan, Robert Tollison and Gordon Tullock, Towards a Theory of the Rent-Seeking Society (1980).Google Scholar

26 James Buchanan, Liberty, Market and State: Political Economy in the 1980s, at 217 (1986) [hereinafter Buchanan, Liberty, Market, and State].Google Scholar

27 As an aside, the formulation of a constitutional choice designates the dividing line between Buchanan and von Hayek on the link between politics and law. The legal evolutionist von Hayek would have held strong reservations against such “rationalist constructivism” and the critique vice versa can be found in James Buchanan, The Limits of Liberty: Between Anarchy and Leviathan 167 (1975).Google Scholar

28 See generally Krasner, Stephen D., Sovereignty: Organized Hypocrisy (1999).Google Scholar

29 Scharpf, Fritz W., Governing in Europe: Effective and Democratic? 121 (1999).Google Scholar

30 See generally Biebricher, Thomas, Sovereignty, Norms, and Exception in Neoliberalism, 23 Qui Parle 77 (2014) (providing reflections on the paradox of sovereignty).Google Scholar

31 Giandomenico Majone, The Rise of the Regulatory State in Europe, 17 West Eur. Pol. 77 (1994).Google Scholar

32 See Follesdal, Andreas & Hix, Simon, Why There Is a Democratic Deficit in the EU: A Response to Majone and Moravcsik, 44 J. Common Mkt. Stud. 533, 542–44 (2006).Google Scholar

33 Giandomenico Majone, From Regulatory State to a Democratic Default, 52 J. Common Mkt. Stud. 1216, 1222 (2014) [hereinafter Majone, Democratic Default].Google Scholar

34 Geoffrey Brennan & James Buchanan, The Reason of Rules: Constitutional Political Economy 134 (1985).Google Scholar

35 Id. at 31.Google Scholar

36 Id. at 140.Google Scholar

37 Buchanan, Liberty, Market, and State, supra note 26, at 56.Google Scholar

38 See Buchanan, James, The Potential of Taxpayer Revolt in American Democracy, 59 Soc. Sci. Q. 691, 693–96 (1979).Google Scholar

39 Buchanan, Liberty, Market, and State, supra note 26, at 217.cGoogle Scholar

40 Buchanan & Musgrave, supra note 5, at 126.Google Scholar

41 Brennan & Buchanan, supra note 34, at 146.Google Scholar

42 Stephen Gill, European Governance and New Constitutionalism Economic and Monetary Union and Alternatives to Disciplinary Neoliberalism in Europe, 3 New Pol. Econ. 5, 5 (1998).Google Scholar

43 Id. at 8.Google Scholar

44 Id. at 15–17.Google Scholar

45 Dermot Hodson & Uwe Puetter, The European Union and the Economic Crisis, in European Union Politics 374 (Michelle Cini & Nieves Pérez-Solórzano Borragán eds., 4th ed. 2013).Google Scholar

46 For concise explanations of the rationale and functioning of these reform measures, see Evaluating the Efficiency of the Two-Pack and Six-Pack, Council, European, http://www.consilium.europa.eu/en/policies/six-pack-two-pack-review/ (last visited Sept. 13, 2016).Google Scholar

47 Michael Bauer & Stefan Becker, From the Front Line to the Back Stage: How the Financial Crisis Has Quietly Strengthened the European Commission, Public Money & Management, 34 Pub. Money & Mgmt. 161, 161–63 (2014).Google Scholar

48 Jean-Claude Juncker: State of the Union 2016: Towards a better Europe: A Europe that protects, empowers and defends. http://europa.eu/rapid/press-release_SPEECH-16-3043_en.htm.Google Scholar

49 To be precise, it is not entirely off the table because in cases of natural disasters or grave recessions exceptions to the BBA can be made.Google Scholar

50 Majone, Democratic Default, supra note 33, at 1221–22.Google Scholar

51 See generally Brown, Wendy, American Nightmare: Neoliberalism, Neoconservatism, and De-Democratization, 34 Pol. Theory 690 (2006); see also Biebricher, supra note 30, at 100–03.Google Scholar

52 Id. at 695. More recently, Brown has expanded upon her diagnosis with a critique of some landmark Supreme Court rulings, especially the now infamous Citizens United case. She highlights the neoliberal logic of markets and capital underlying the ruling. Still, the neoliberalization of law she describes in the contemporary American context remains different from the kind of juridical neoliberalism in the European context. See Brown, Wendy, Undoing the Demos: Neoliberalism's Stealth Revolution 151–74 (2015).Google Scholar

53 Brown, supra note 51, at 696.Google Scholar

54 Brown, supra note 51, at 695.Google Scholar

55 Mark Blyth, Austerity: The History of a Dangerous Idea 13 (2013).Google Scholar

56 Mario Monti, Charlemagne: The Other Moral Hazard: Charlemagne, The Economist (September 29, 2012) http://www.economist.com/node/21563741.Google Scholar

57 When the Portuguese Supreme Court ruled against the implementation of reforms demanded by the Troika, lawmakers responded with a constitutional reform.Google Scholar

58 See Wilkinson, Michael, The Specter of Authoritarian Liberalism: Reflections on the Constitutional Crisis of the European Union, 14 German L.J. 527 (2013); Christian Joerges, Law and Politics in Europe's Crisis: On the History of the Impact of an Unfortunate Configuration, 21 Constellations 249 (2014).Google Scholar