Neoliberalism, Neoclassical Economics, and Foucault Dominant Schools of Economic Thought in American Anarcho-Liberalism and German Ordoliberalism

Abstract

This paper examines the influence of American and German neo-liberalism on the dominant school of economics in their respective countries based on an extended version of Foucault’s The Birth of Biopolitics. The analyses of the American neoliberal economists, or anarcho-liberalists, legitimised the extension of the basic neoclassical model to non-economic, social phenomena and invalidated governmental intervention in both economic and social phenomena. In contrast, the assumption of the German neo-liberals, or Ordoliberals, of markets as artificial, imperfect constructs validated setting the right conditions for the market by the government. This analysis demonstrates and draws lessons from the historical conditions under which a school with divergent assumptions from perfect rationality and perfect competition became dominant in policymaking in a neo-liberal political-economic environment.