Making the world open again. The US State Department's thwarted first steps towards global neoliberalization during the Great Depression and World War II

Abstract

Given that neoliberal rationality implies the economic opening of state spaces in a borderless global market, this article proposes a critical reassessment of the origins of actually existing neoliberalism, with the twofold aim of addressing the empirical shortcomings of the conventional narrative and specifying the conditions of the emergence of neoliberalization. The present authors demonstrate how the US Department of State implemented a foreign economic policy between 1933 and 1947 which constituted one of the first neoliberal experiments of the twentieth century, engendering the hotbed of transatlantic neoliberalization which unfolded, albeit incompletely, in the following decades. This revisitation of the origins of neoliberalization has, in turn, enabled a theoretical reframing of the neoliberal spatiality, intersecting multiple stream framework analysis and the neo-institutionalist approach, in order to highlight the complexity of the factors responsible for the emergence of political neoliberalism in the context of the global crisis of the 1930s and 1940s.

A truncated historiography and ontology of neoliberalism

Historical work on neoliberalism has shown that this movement of ideas emerged in the 1930s, in reaction to nationalistic and dirigiste drifts following the First World War and the Great Depression (Audier, 2018; Mirowski and Plewe, 2009, Peck, 2010, Plewe et al., 2006). According to a recurrent narrative, neoliberal policies began to be implemented much later, starting in the 1970s in Latin America and then during the 1980s in the rest of the world (Cahill, Konings, 2017, Chomsky, 1998, Gerstle, 2022, Harvey, 2007, Peck, 2010, Steger, Roy, 2010, Saad-Filho, Johnston, 2005). Whatever the theoretical approaches considered (neo-Marxist, neo-regulationist or neo-institutionalist), academic neoliberalism is widely accepted to have preceded political neoliberalism by several decades. Until the 1970s, neoliberal ideas allegedly occupied a marginal space in the political arena, with another political paradigm dominating post-war public policy, particularly in the Atlantic Alliance countries, which John Ruggie has since called ‘embedded liberalism’ (Ruggie, 1982) and Bob Jessop a ‘Keynesian Welfare State Regime’ (Jessop, 2002). It is generally assumed that this regime of embedded liberalism dominated public policy until the stagflation crisis of the 1970s, when the new conservative right, close to neoliberal academic circles, notably the Chicago School, managed to implement an alternative agenda in several countries (Chile under General Pinochet, the United Kingdom under Margaret Thatcher and the United States under Ronald Reagan). This reading adopts the analytical framework of the theories of policy regimes (Krasner, 1983) and policy paradigms (Hall, 1993), according to which History is defined as the succession of various ideologically coherent normative systems dominating each era (the classical liberal regime, the Keynesian regime and then the neoliberal regime here).

This conventional account presents several epistemological problems. First, it omits the existence of neoliberal policies prior to the 1970s, maintaining a mythical, even sometimes nostalgic, relationship with the post-war period, summarily reduced to the apogee of Keynesianism and the welfare state (Cebul et al., 2019). This narrative is, therefore, wrong about both the historical circumstances and also the causes of the origins and actual emergence of political neoliberalism. On an ontological level, this narrative considers neoliberalism as a new political regime resulting from the recomposition of the international division of labour during the 1970s and the emergence of a new post-Fordist mode of accumulation in the Western world. This prevents us from seeing how neoliberalism is a broader and deeper political phenomenon, initially resulting from the will of part of the Western liberal elite to address the global crisis of the 1930s through a project of geopolitical refoundation based on the economic opening of state spaces and their reciprocal integration within a fluid and globalized market (Brennetot, 2015, Masini, 2012, Masala and Mingardi, 2021, Slobodian, 2018). Far from being confined to a small group of economists, neoliberal ideas were indeed the subjects of policy agendas implemented by various institutions prior to the 1970s, particularly in Europe and the United States (Brennetot, 2022, Cebul et al., 2019; Denord and Schwartz, 2009, Dardot and Laval, 2014, Foucault, 1978, François-Poncet, 1969, Mellink, 2021, Moretti, 2014, Nicholls, 1994, Peacock and Willgerodt, 1989, Posner, 1977, Sassoon, 1986). These facts in and of themselves challenge the conventional history of political neoliberalism and incite a better understanding of the complexity of its origins.

Considering ‘the constitutively incomplete, experimental and ultimately polymorphic character of neoliberalization processes, as well as their endemically path-dependent character’ (Brenner et al., 2010), this article seeks to excavate the primitive forms of neoliberal policies initiated in the 1930s in response to the Great Depression and the ensuing global geopolitical crisis. In so doing, it thus highlights the ideological affinity between the project defended by neoliberal economists during the 1930s, favourable to the political restoration of an open global market as a privileged instrument for regulating international relations, and the strategy pursued by the US Department of State (DOS) at the same time. In contrast to regime and policy paradigm theories, this genealogical and constructivist approach implies considering neoliberalism as a set of spatial and political norms and instruments implemented in processual and non-linear ways, embedded in situated, dynamic and axiologically heterogeneous policy regimes (Brennetot, 2022). This perspective explains why neoliberalization is less the sudden implementation of a pre-formalized blueprint than a socially constructed, path-dependent, open-ended geohistorical process, the actual deployment of which evolves through discontinuous feats of trial and error, concomitantly with other political processes in potential contradiction (Keynesianism, welfarism and geopolitical realism in the post-war period, for example).

This article begins by specifying the methodological criteria for grasping the various manifestations of political neoliberalism, before providing an overview of the geographic forms and institutional norms associated with this political rationality. This framework then makes it possible to highlight the existence of an ideological correspondence between the neoliberal ideal and the foreign economic policy promoted by the DOS in the United States between 1934 and 1947. Empirical analysis demonstrates how the DOS policy constitutes one of the first neoliberal experiments of the twentieth century as well as the ensuing hotbed of the transatlantic neoliberalization which unfolded in the following decades. This revisiting of the origins of neoliberalization enables a theoretical reframing providing a better insight into the complexity of the factors responsible for the emergence of political neoliberalism in the context of the global crisis of the 1930s and 1940s, in addition to the reasons usually proposed to explain its intensification from the 1970s onwards.

Methodological framing

The use of the neoliberal label as a category for analyzing political practices implies being able to establish a match between these practices and the ideas advocated by those who formulated them, in this case, the theorists of neoliberalism. Such an ideological characterization of political–economic practices cannot be taken for granted: the label ‘neoliberal’ has been applied to very heterogeneous policies and actors who, with a few exceptions, have never claimed to be neoliberal, nor been inspired by neoliberal economists. To account for the fact that political neoliberalism never quite fits the agenda promoted by neoliberal economists, Brenner and Theodore (2002) have helpfully suggested the notion of ‘actually existing neoliberalism’. This concept serves to emphasize the fact that political neoliberalism, like many actually existing ideologies, is never quite the scrupulous application of a pre-established doctrine or blueprint. The implementation of economic–political ideas takes place within contexts that are mostly subject to axiological constraints (heterogeneity of stakeholders, inertia of institutions, divergence of interests, etc.), leading to conflicts, blockages, compromises and amalgamations that are more or less transparent and coherent. The fact that actually existing neoliberalism presents itself in incomplete forms, or in only partial correspondence with the central ideas of the eponymous academic doctrine, gives rise to contradictory interpretations among scholars: while some draw the conclusion that political neoliberalism corresponds to a protean reality which is in a permanent process of renewal (Brenner et al., 2010), others consider that the plasticity of the label compromises its heuristic scope and leads to analyses which are all too often approximate and biased (Barnett, 2005; Hartwich, 2009). The fact that some interpretations of neoliberalism have sometimes led to over-interpretation does not give sway to arguments contesting the effective existence of a properly neoliberal ideological corpus, now solidly established by research conducted in the field of the history of political ideas and likely to serve as a criterion to assess the extent to which a given policy can be recognized as neoliberal or not. To avoid the pitfall of overgeneralizing without giving up the ambition of ideological categorization, empirical manifestations of actually existing neoliberalism can be distinguished according to three identification criteria:

If a political actor explicitly draws on the proposals of neoliberal intellectuals to guide their choices, including under the influence of ideological relays (think tanks, lobbies and media), as was the case with Margaret Thatcher's government from 1979 onwards.

If a neoliberal intellectual engages in political action (an example being the economist Ludwig Erhard in the Federal Republic of Germany between 1948 and 1966).

If a political actor makes choices that are ideologically aligned with the recommendations of neoliberal intellectuals, without having any direct political connection with them.

Without always specifying this explicitly, analyses of political neoliberalism use these different criteria to demonstrate their neoliberal nature. If the first two configurations provide hardly debatable evidence, the third situation, although very common, is more delicate because the link between the academic doctrine and the political practice is indirect and can result from two combinable configurations:

- 3A – Neoliberal ideas can influence decision-makers when they pass from the status of a specific doctrine to that of a zeitgeist, i.e., a ‘policy paradigm’ (Hall, 1993), which actors appropriate without knowing their doctrinal origin or ideological scope. This happened in the 1990s when neoliberalism became an inescapable paradigm for many leaders, expressed in the ‘Washington consensus’ (Williamson, 2004);

- 3B – When a political actor formulates diagnoses and projects aligned with those of neoliberal academic networks, without having direct links with the latter and without neoliberal ideas corresponding to any zeitgeist. Neoliberal ideas are then akin to a rationality (Peck, 2010, Dardot, Laval, 2014), i.e., a set of rationales that can be reached from different independent social positions.

Between the 1990s and the mid-2010s, a period in which neoliberal ideology was at the height of its influence, the latter configuration (3B) is difficult to disentangle from the former (3A). Before 1990, in contrast, it was possible for a political actor to make decisions consistent with neoliberal rationality, without being linked to neoliberal intellectual networks. This was the case, for example, of the left-wing governments in France from 1983 onwards (Fourcade-Gourinchas and Babb, 2002) and in New Zealand the following year (Peet, 2012). Such convergences are rarely entirely coincidental and often result from particular political contexts favouring the adoption of similar visions by socially dispersed actors. If various economists from different countries in Europe and the United States, belonging to heterogeneous academic traditions, made converging diagnoses of the crisis of the 1930s, to the point of giving impetus to an intellectual movement called ‘neoliberalism’, it is not surprising that certain political leaders came to the same conclusions in the same circumstances. Highlighting such similarities involves identifying formal correspondences between political economy practices and specific ideologies, which Freeden calls ‘morphological analysis’ (Freeden, 2013).

Geo-morphology of neoliberal rationality

Considering the work carried out in the field of the history of ideas over the last 20 years, neoliberal ideological rationality can be defined by a set of central claims (Brennetot, 2022):

- ‘the belief in the benefits of a market economy regulated by price freedom and competition, this freedom being considered as the foundation of economic efficiency;

- the need for states to create the institutional conditions for the optimal functioning of markets, neoliberalism here differs from classical liberalism and all forms of libertarianism insofar as it considers that free market exchanges are only possible within the framework of institutions which guarantee effective competition;

- the opportunity to integrate national markets into a system of free trade and economic competition on a global scale, seen as a collective guarantee of prosperity, self-discipline and geopolitical stability between states’.

The third constitutive claim of neoliberal rationality contains a spatial dimension insofar as it envisages the ideal world in the form of a globalized market integrating the productive activities located within the territory of states in a system of transnational economic, commercial and financial exchanges. Considered mutually beneficial from a utilitarian perspective, such a spatial organization is seen as being conducive to the pacification of international relations. In return, it requires that states adapt their internal organization and collectively submit to the discipline of an economically open world. This way of thinking refers to one of the fundamental principles of the liberal intellectual tradition, which dates back to Emeric de Crucé, a seventeenth century monk, also lengthily evoked by Montesquieu, R. Cobden and N. Angell in the following centuries: all considered free trade between nations as being major potential sources of universal peace.

Neoliberalism can thus be understood in two ways. Firstly, as a reframing of the liberal agenda based on the refusal of the ‘laissez faire’ approach of physiocrats and the Manchester School, and secondly as the promotion of an institutional market, considered indispensable to the deployment of fair and efficient competition. Neoliberals nevertheless remain attached to free-trade pacifism, Cobden still being for them a source of inspiration. What makes the neoliberal project original is its ambition to combine certain classical principles of liberalism (free prices, free movement of goods, etc.) with more innovative ideas, such as the institutionalization of a global market and the simultaneous rejection of the old laissez-faire and dirigiste ideals of the twentieth century. In the neoliberal worldview, fluidity of space is achieved by lowering economic barriers and decontainerizing state spaces (Moisio, 2011; Taylor, 1994). This implies a renunciation of classical sovereignty and the adaptation of internal economic policies to the fluctuations of external markets institutionalized in a form similar to what John Agnew retrospectively calls ‘integrative sovereignty’ (Agnew, 2009).

Far from limiting themselves to speculative reflections, neoliberal economists have also tried to think about the practical problems of their respective eras. The prefix ‘neo’ can, therefore, be understood in a more contextual sense, suggesting the need for a historical refoundation inscribed in the specific circumstances of the Great Depression and the ensuing nationalist withdrawal of the 1930s: noting the failure of the liberal experiment of the nineteenth century and the rise of economic dirigisme, neoliberals participated in efforts to shape a new liberal world order (Baudin, 1939; Haberler, 1936; Hayek, 1937, 1939; Heilperin, 1947; Lippmann, 1937; Machlup, 1943; Mises, 1938; Rappard, 1937; Robbins, 1937, 1939; Röpke, 1956; Rueff, 1933). For them, the crisis of the 1930s was the result of a process of decline of classical liberalism, which was progressively replaced by harmful political regimes with dirigiste, nationalist and even totalitarian tendencies. The economic withdrawal of states into their own territory or area of influence following the onset of the Great Depression, the increase in customs tariffs, the suspension of currency convertibility and the blocking of international economic circuits led, according to them, to the rupture of supply chains, stifling of national economies, increase in production costs and general impoverishment of nations. In this context, powerful states were tempted to use force and violence to expand their resources, including through discriminatory agreements, unequal treaties and territorial conquests, ultimately leading to a deterioration of international relations and war. According to them, the only remedy possible lay in restoring an open global economy, in which states collectively commit themselves to enforce the discipline necessary for the functioning of a free, competitive and transnational market (Brennetot, 2015), which some analysts today call ‘ordoglobalism’ (Slobodian, 2018).

Neoliberalism can be seen as a historically situated political rationality, emerging in the particular context of the 1930s as an attempt to respond to the historical failure of classical liberalism, accused of underestimating the beneficial role of political institutions, and as an alternative to the nationalist and dirigiste drifts encouraged by the Great Depression. It is, therefore, not a simple reboot of classical liberalism. Less interventionist and leftist than ‘new’, ‘progressive’ and ‘social’ liberalisms appeared at the beginning of the twentieth century or than Keynes’ liberalism, neoliberalism appeared as a modest attempt to renew liberalism, the originality of which lay above all in its ambition to organize the world emerging from the Great Depression into a globalized institutional market.

This diagnosis, shaped in response to the crisis of the 1930s, has led neoliberal economists to advocate heterogeneous institutional solutions. Although some have remained committed to a unilateral abolition of tariffs in line with classical liberalism (Machlup, Mises), others have advocated new solutions such as a ‘great association’ of free nations (Lippmann) or the creation of a world federation to ensure multilateral compliance with the institutional rules of a free world market (Robbins, Hayek, Einaudi, Heilperin).

Although neoliberals felt isolated in a world they saw as being consumed by economic nationalism and warmongering, the crisis of the 1930s gave rise to various attempts to change the state of play, some of which were akin to the neoliberal ideal. The proximity between the latter and some of the political reforms carried out at the time can be explained by the fact that the crisis led to a profound ideological destabilization among the ruling elites. This upheaval generated a search for new solutions, some of which were aligned with proposals advocated by neoliberal economists independently. For example, Philip Snowden, Chancellor of the British Exchequer (1929–1931), Paul Van Zeeland, Prime Minister of Belgium (1935–1937) and the Economic and Financial Organization of the League of Nations undertook various initiatives, all proving unsuccessful, in order to try to re-establish free international trade (Clavert, 2009; Clavin, 2013; Levkovych, 2021). At the same time, the foreign economic policy pursued by the US DOS under Secretary of State Cordell Hull (1933–1944) undertook a strategy in keeping with the rationale advocated by neoliberal economists. The originality of the DOS policy lay in the fact that its effects were significant, albeit strongly thwarted, long before the first neoliberal economists exerted any significant influence. Although it had no role in the constitution of the neoliberal intellectual movement, the DOS was nevertheless among the first institutions to engage in concrete actions underpinning the emergence of actually existing neoliberalism.

The core of the US DOS neoliberal project

The victory of the Democrats in the 1933 elections marked a break in the history of U.S. foreign economic policy, with the appointment of Cordell Hull by Franklin D. Roosevelt as head of the DOS initiating a partial and lasting policy of international trade liberalization. With his long parliamentary experience, Hull was at the time one of the most unwavering and ardent supporters of free-trade pacifism in Congress. In 1929, he unreservedly condemned the historic increase in tariffs enforced by the Republican Smoot-Hawley Tariff Act. After Black Thursday, he considered the imposition of exceptionally high tariffs as locking the United States into a long-lasting economic crisis while setting in motion a cycle of retaliations fundamentally leading to the collapse of world trade. According to him, the economic fragmentation of the world made it more necessary than ever to return to free trade, a position he defended in the definition of the Democrat program during the 1932 election campaign, which brought him closer to Roosevelt.

Supporting Roosevelt's candidacy, however, did not cause him to deviate from his ideological line, which placed him in a singular position within the Democrat party camp. Hull was not only external to the Brain Trust created by Raymond Moley and Rexford Tugwell but also his positions clearly set him apart from the ideas advocated by the New Dealers. The latter considered that the economic recovery of the United States required support for domestic activities, even if that meant keeping the country's economy isolated from the rest of the world. It was with this mindset that Roosevelt prioritized domestic recovery during the first months of his term: freezing gold prices, introducing guaranteed domestic prices and restricting imports under the Agricultural Adjustment Act and the National Industrial Recovery Act. All these provisions ran counter to the principles of economic openness tirelessly advocated by the new Secretary of State. Roosevelt's refusal to participate in the search for a multilateral solution at the London Monetary and Economic Conference in June 1933 shattered Hull's hopes of taking advantage of his position at the head of the DOS to try to halt the autarkic drift into which his country seemed inexorably locked.

Although he never had any direct connection with neoliberal theorists, Hull then found himself in an intellectual position close to theirs: while the world seemed to be tipping over into an exacerbated economic nationalism, unprecedented since the nineteenth century, Hull and the neoliberals considered renouncing the liberal promises of free-trade pacifism was a remedy worse than the evil it was supposed to cure. Like editorialist Walter Lippmann, also an ardent promoter of Wilsonian internationalism and author of The Good Society (1937), which founded the colloquium of the neoliberal academic network in 1938 (Audier, 2018; Brennetot, 2015), Hull had every reason to be concerned about the isolationism towards which the Roosevelt administration's economic policy leaned in its initial months. Hull shared with neoliberal economists the conviction that protectionist measures taken worldwide were likely to lead to shortages and war, and that a return to an open world economy was the only way to regain collective prosperity and stability. Like the neoliberals, Hull also believed in the benefits of the Most Favored Nation (MFN) clause and was quite indifferent to the inequalities induced by free trade. From an operational point of view, he believed the creation of an international free-trade organization was necessary, as did many neoliberal economists, despite remaining aware of the obstacles to such a project. In particular, he was convinced that a free-trade policy required a transfer of that policy from Congress, which was too sensitive to pressures from the electorate, to the federal government, more likely to pursue a foreign economic policy independent of local vested interests. Like neoliberal economists, Hull defended a global vision of free trade and opposed any system of regional blocs. In contrast to the neoliberals who believed that a liberal international organization was only relevant between states that were themselves founded on liberal principles, Hull believed that free trade was universally beneficial, even when extended to authoritarian regimes. This meant that Hull was not in complete agreement with neoliberal rationality, but that there was a convergence of views between him and the neoliberals which, while not unique, singled him out strongly among the major world leaders of the 1930s. Hull, like the neoliberals, differed, for example, from more syncretic liberal economists such as J. Meade, J. Viner, A. Hansen or the economists of the League of Nations, who were ready to support free-trade conditional on the achievement of full employment or social protection objectives. Hull's vision thus had a strong morphological correspondence with that of neoliberal economists, without any direct social relationship with them. The neoliberal character of such commitment is, therefore, demonstrated by virtue of the aforementioned criterion 3b.

After his failure at the London Conference, Hull considered resigning, but instead decided to persevere and return, especially at the Seventh Pan-American Conference held in Montevideo in late 1933 (Gellman, 1995). At this point, Roosevelt announced his support for the reform of trade policy promoted by the DOS in favour of freer trade. In June 1934, the Reciprocal Trade Agreement Act (RTAA) prepared by the DOS gave the government the power to negotiate bilateral agreements without congressional approval up to a limit of 50% of those in place. These agreements had to be negotiated with respect to the MFN principle, according to which each party undertook to apply the lowest tariff among all those in existence to the co-signatory. The objective of the DOS was to encourage US trading partners to generalize tariff reductions, without going through a multilateral agreement, while initiating a gradual recovery in global trade. The RTAA was, therefore, less ambitious than the unilateral, across-the-board reduction Hull would have preferred to implement (Haggard, 1988). However, his experience and intimate knowledge of the protectionist forces in Congress convinced him to adopt a cautious, pragmatic and gradual strategy rather than err towards an overly disruptive reform. By transferring responsibility for trade treaties from Congress to the executive branch, the RTAA isolated trade policy from members of Congress and considered it, for the first time in US history, as an instrument of foreign policy in the hands of the diplomatic administration. Thus occurred a rescaling of the rationale for foreign economic policy, which began to be defined in terms of U.S. international geopolitical interests rather than strict domestic considerations. The implementation of the RTAA was not, however, a definitive victory for the DOS, since it was only valid for a period of three years. It did, however, create the conditions for a break that could weaken the protectionist barrier enclosing the United States. In addition to the reluctance of Congress, Hull also had to fight against opponents of free trade within the administration, such as Raymond Moley and George Peek (Haggard, 1988; Irwin, 2017; Rosen, 2005). While manoeuvering to eliminate them, Hull surrounded himself with a network of senior officials committed to the cause of free trade (Francis Sayre, Harry Hawkins, Leo Pasvolsky, Henry Grady). Even Under-Secretary of State Sumner Welles, with whom relations had previously been complicated (Gellman, 1995), strongly defended the free-trade line adopted by the DOS. The assignment of trade negotiation management under the RTAA to a Committee on Trade Agreements, composed of DOS-appointed officials working under the seal of anonymity, facilitated the implementation of a free-trade policy line, independent of Congress (Eckes, 1995). The DOS also benefitted from the support of exporting companies as a result of the October 1933 creation of the Organization of the National Federation of Foreign Trade Associations, the growing lobbying of which helped to convince Roosevelt to initiate his reform in favour of the RTAA (Woods, 2003).

From 1934 onwards, the conversion of the DOS to free-trade pacifism represented one of the first historical forms of institutionalization of neoliberal rationality. The implementation of the RTAA enabled the signing of 16 initial bilateral agreements respecting the MFN clause, before a first legislative extension in 1937 (Irwin, 2017). The supporters of the RTAA, led by Hull, considered that the trade policy initiated by the United States was causing a reduction in customs barriers and a resumption of trade (Hull, 1948). Despite the unwavering faith and determination of the Secretary of State, this dynamic did not, however, enable the Second World War to be avoided.

Paradoxically, the outbreak of the war gave a second wind to the DOS's free-trade policy. Until then, Roosevelt had remained aloof from the foreign economic policy of his Secretary of State. From 1940 onwards, he made the re-establishment of free trade one of the pillars of the reconstruction of the post-war world. Although the DOS was relieved of matters relating to the conduct of military operations, it was nevertheless given responsibility for the political preparation of the post-war period. Various strategic think tanks were successively created, such as The Advisory Committee for Research on Problems of Foreign Relations (1939), the Division of Special Research (1941), the Advisory Committee on Postwar Foreign Policy (1941) and the Committee on Postwar Foreign Economic Policy (1943). These committees were entrusted to people close to the Secretary of State (Pasvolsky, Hawkins) and mobilized the support of liberal think tanks such as the Council of Foreign Relations (including A. Hansen, J. Viner) to shape the reconstruction of the post-war world in accordance with the aims of the DOS (Aaronson, 1991; Notter, 1949).

In parallel with the DOS's unanimously pro-free trade prospective thinking, the government obtained the systematic renewal of the RTAA in 1940, 1943 and 1945. The RTAA momentarily became a non-partisan issue after the disqualification of the isolationist camp within the Republican Party.

A thwarted neoliberal impetus

Despite thereafter benefiting from Roosevelt's official support, a powerful administrative cohesion and temporary annihilation of the protectionist wing within Congress, the DOS encountered external obstacles throughout the conflict which made it difficult to promote its project of post-war universal liberalization.

Within the administration, the economic liberalism of the DOS was not unanimously agreed upon. In particular, the Treasury Department, headed by Henri Morgenthau with the support of economist Harry D. White, did not share the free-trade views of the DOS. Entrusted by President Roosevelt to resolve monetary issues, the Treasury entered into negotiations with the United Kingdom, which led to the Bretton Woods Agreement signed in August 1944, setting out the creation of the IMF, the IBRD and an inter-governmentally defined fixed parity system with the dollar. These agreements aimed to facilitate monetary cooperation between governments while leaving them free to define their domestic economic policy in accordance with the paradigm of ‘embedded liberalism’ (Helleiner, 2019). Concurrently, the DOS advocated a substantially more liberal policy agenda, which proved difficult to defend with US allies.

The DOS project of restoring a world trade market implied lowering the trade borders erected during the inter-war period by as many countries as possible. Among the latter, the United Kingdom was the main stake, since the Ottawa Agreement (1932) had made the Commonwealth the world's largest trading bloc, protected by discriminatory tariffs justified in the name of ‘imperial preference’ against external competition. Restoring an open world without the participation of the Commonwealth seemed inconceivable.

In 1938, an initial agreement was signed between the United States and the Chamberlain government, but the outbreak of war left no time to restore trade between the two countries. The United Kingdom's involvement in the conflict required considerable resources, which the United States offered to help provide in exchange for a subsequent abandonment of imperial preference and participation in the post-war reopening of the world economy. This strategy proved unsuccessful, as British political elites had become strongly attached to trade protectionism. Conservative leaders (Leo Amery and Lord Beaverbrook) opposed the free-trade views of the DOS in the name of preserving privileged links with the rest of the Empire. The more left-wing Labour members (Aneurin Bevan, Emmanuel Shinwell) rejected these within their condemnation of the market economy. Moderates on both sides, such as Churchill and Stafford Cripps, doubted the strength of US support for trade multilateralism and feared a return to American protectionism after the war in the event of recession. For some among the senior administration and experts, notably Keynes, the return to full employment came before free trade and potentially even required protectionist stimulus policies (Irwin et al., 2008; Zeiler, 1999). James Meade, editor of the World Economic Survey within the Economic Section of the League of Nations in Geneva at the end of the 1930s, was the 1942 author of a British project for a return to free trade which endeavored to preserve trade preferences (Meade, 1942). Only economist Lionel Robbins, the leading British figure in the neoliberal academic network and director of the economic section of the Cabinet Office during the Second World War, shared the US Secretary of State's enthusiasm for free trade, without having any notable influence within the British state apparatus to relay his views. Throughout the war and in the years thereafter, the UK was a recalcitrant junior partner (Gardner, 1969). In each round of negotiations, British representatives adopted an ambivalent position, mixing frank condemnation of the neoliberal ideas of the DOS with commitments to vague and non-binding principles. This was the case in the first exchanges on the Lend-Lease Agreement in 1941, in the formulation of the fourth point of the Atlantic Charter a few months later and, once the United States entered the war, in the negotiations on Article 7 of the Mutual Aid Agreement in 1942 and in the exchanges of views between the DOS and British experts in the autumn of 1943. Until the end of the war, the priority given to military considerations masked the deep differences of opinion between the British political class and DOS free traders (Zeiler, 1999).

Hull's resignation in November 1944 for medical reasons did not lead to a halt in the neoliberal ambitions of the DOS. Clayton, a big businessman who had made his fortune in the cotton trade and a fierce supporter of free trade, was appointed Under Secretary of State for Economic Affairs by Roosevelt to perpetuate the Hull project (Fossedal, 1993). He had several important supporters within the DOS such as Claire Wilcox, Director of the State's Department Office of International Trade Policy and Harry Hawkins, Minister-Counselor of the Embassy for Economic Affairs in London.

The unilateral suspension of the Lend-Lease Agreement by Harry Truman, who became President after Roosevelt's death in April 1945, provided the opportunity for a new round of negotiations with the UK in the months thereafter. In exchange for a $3.75 billion loan, the new Labour government committed to a return to currency convertibility within a year, to abandoning trade quotas and to participating in multilateral negotiations with a view to reducing tariffs and creating an International Trade Organization (ITO). In the wake of the loan agreement, in December 1945, the DOS published some ‘Proposals for the Expansion of World Trade and Employment’ which remained eminently faithful to its free-trade views: if the objective of full employment was loosely affirmed to satisfy the expectations of several Commonwealth countries, this aims supposedly resulting from free trade and not from a return to national protectionism.

In the following three years, trade negotiations became even more complicated with the expansion of negotiations to a group of some 20 countries at the London (October–November 1946), New York (January–February 1947) and Geneva (May–October 1947) conferences. The DOS met with outright opposition from a large number of countries. While the UK stuck to its imperial preference, Australia, India and developing countries shared their hostility to the neoliberal DOS project while demanding protection clauses that would enable them to diversify their domestic production. Only a few countries such as Canada, the Netherlands and Belgium seemed willing to follow the DOS proposals (Irwin et al., 2008).

The negotiation process was divided between discussions on a provisional tariff reduction agreement, the GATT and the preparation of the founding charter of an ITO. The result of these negotiations led to an ambiguous output with regards to the original ambitions of the DOS. Under the influence of several Commonwealth and Latin American countries, the ITO Charter signed in Havana in 1948 specified numerous protectionist clauses intended to enable national governments to steer policies of full employment and industrial diversification (Zeiler, 1999). In line with embedded liberalism, the Havana Charter was widely criticized in the United States, not only by traditional protectionist circles but also by liberal business associations which found the Charter far too restrictive and protectionist. Contrasting with Wilcox's conciliatory attitude during the negotiations, the vehement criticism of business internationalists such as Philip Cortney, close to neoliberal economists also hostile to the protectionist nature of the Charter (Mises, Heilperin), contributed to de-legitimizing and weakening the ITO project in US federal institutions (Slobodian, 2018). In 1950, the government's refusal to ask Congress to ratify the Charter underlined the abandonment of a trade negotiation process in which the DOS had lost political control during the discussions. There remained the GATT agreement signed in October 1947, which led to international tariff cuts, the freeing nature of which was partially jeopardized by the multiplication of quotas.

Between 1945 and 1950, the neoliberal project of the DOS was thus largely thwarted, without being completely compromised: the RTAA at home and the GATT abroad now offered a flexible political framework, integrating protectionist provisions while leaving the supporters of free trade the possibility of engaging in various liberalization attempts. Thereafter, the DOS and successive US presidents remained faithful to Hull's stance. The difficulty they encountered was to find partners ready to commit to the institutionalization of a transnational market (Stein, 1984), which they gradually achieved with Western European countries during the 1950s (Asbeek Brusse, 1997; Brennetot, 2022) via the abolition of quotas, the gradual lowering of tariffs and the return to free currency convertibility, initiating a process of regional neoliberalization which was less ambitious but more realistic than the initial global dream which Hull had tried to achieve.

Concluding perspectives

Empirically, this paper shows that neoliberal rationality was gradually and partially put into practice as early as the 1930s, that is, well before the 1970s, which is when conventional history would have believe us it began. In this respect, the DOS, headed by Secretary of State Hull between 1933 and 1944, played a decisive role in the institutionalization of political neoliberalism at the historical moment when the United States was engaged in various attempts to reorganize world geopolitics, following the crisis of the 1930s and the Second World War. Among the various hegemonic projects proposed at the time, that defended by the DOS had the particularity, given what the neoliberal theorists were proposing at the same time, of attempting to reboot economic globalization on the basis of an open market integrating economic state spaces within the framework of a system of flows which would be supposedly mutually advantageous and a source of international appeasement. Such a spatial arrangement implied renouncing the beggar-thy-neighbour strategies of the 1930s and a commitment to a new regime of limited and integrative sovereignty in which governments would subordinate their domestic economic policies to respect free price and competition on an international scale.

To achieve this, the DOS relied on lowering tariffs within the 1934 RTAA framework, which constrained and restricted the scope of the first GATT negotiations of 1947. Despite the strength of the US economy and the unyielding determination of the DOS leadership, this policy faced powerful obstacles. Domestically, the DOS faced the protectionist reluctance of Congress to give the federal government a free hand to pursue a multilateral, frank and sustainable freer trade policy. This constraint obliged the DOS to negotiate the renewal of the RTAA on a regular basis, every two or three years until the Trade Expansion Act of 1962. On an international level, this defiance of Congress at least partially undermined the credibility of the economic projects defended by the DOS. The US faced hostility from a large number of governments committed to trade protectionism, starting with the UK, without which it seemed difficult to engage in the global restoration of free trade. Faced with such impediments, the DOS administrators, with the ongoing support of the Presidency from 1940 onwards, undertook various attempts to persuade and negotiate, with mixed results. Although Hull's great dream of a return to free-trade fizzled out, the DOS leadership did manage to legitimize the free-trade agenda, including therein most of the major texts setting out post-war multilateralism, from the United Nations Charter in 1942 to the Havana Charter in 1948. In addition, the GATT agreements, which were initially intended to be provisional, enabled tariffs to be lowered on an unprecedented scale. Despite the failure of the ITO, the DOS's efforts towards liberalization did not cease, finding better success for this in its strategy of Western European economic integration, at least temporarily, than on a broader scale.

As the institution in charge of the foreign economic policy of the world's leading economic power at the time, the DOS could, therefore, be considered as one of the first institutions effectively involved in the political process of opening up national economies at the core of the neoliberal globalization of the second half of the twentieth century. Although not the only source of early neoliberalization (Brennetot, 2022), the Hull-influenced action of the DOS legitimized the possibility of a revival of economic liberalism on the international scene over the long term and, through many unevenly successful attempts, enabled it to partially and progressively become enshrined within the composite post-war regime of ‘embedded liberalism’, laying the foundations from which the later phases of neoliberalization would be effectively initiated.

The partial obscuring of this primitive neoliberal policy by the dominant historiography is due to the fact that its implementation encountered powerful obstacles. To overcome these, neoliberal rationality required the integration and dilution of its principles in a composite regime mixing heterogeneous political ideas (Keynesian, realist, sometimes neo-mercantilist or even dirigiste), which Ruggie calls ‘embedded liberalism’. The fact that some of these ideas were later discredited (Keynesianism in the 1970s) or rendered obsolete (anti-Soviet realism after the fall of the Berlin Wall) gave the illusion that neoliberal ideas were replacing them, without the latter being perceived as already at the heart of the policy agenda promoted by the US DOS in response to the 1930s global crisis. Contrary to Harvey's (2007) assertions, neoliberalism did not replace the post-war embedded liberalism regime from the 1970s onwards, but rather infused it from the outset and was one of the driving forces behind its subsequent development. The political affirmation of neoliberalism from the 1970s and 1980s onwards corresponded not to a specific point of origin, but rather to the accentuation of a process already at work and initiated several decades beforehand in favour of an economically and spatially open and integrated world under the decisive, if partial, influence of US diplomacy (Goldstein, 1994). From the very beginning, neoliberalization appears to have been a thwarted process, in competition with other political aspirations within axiologically heterogeneous, contradictory and dynamic policy regimes.

From a theoretical point of view, the previous empirical findings invite a renewed understanding of the causes and conditions of the emergence of neoliberalization. The ideational thesis according to which the neoliberalization of public policies resulted from the ideological conversion, from the 1970s onwards, of political elites influenced by the most academically recognized neoliberal economists (F. Hayek and M. Friedman) must be relativized (Cahill, 2013). From the 1930s and 1940s onwards, a number of political leaders committed to freer trade, starting with the leaders of the DOS, initiating a number of reforms that created the framework within which actually existing neoliberalism unfolded over the following decades. This also invalidates the materialist and neo-regulationist explanations according to which neoliberalism resulted from the crisis of the Fordist mode production in the 1970s and its replacement by a new regime of financial accumulation, characteristic of late capitalism (Brenner, 2004; Duménil, Lévy, 2005; Jessop, 2002). Although these two factors contributed to the development of neoliberalism, they were neither the origin nor the exclusive drivers of it.

To better understand the origin of neoliberalization, this article goes against parsimonious approaches and suggests instead, in line with and complementing Sheppard's constructivist approach to free-trade spatialization (2005), combining two multifactorial approaches: the multiple stream framework developed by Kingdon to explain political changes based on an approach at the crossroads of the ‘problem stream’, the ‘politics stream’ and the ‘policy stream’ on the one hand (Kingdon, 1984) and the neo-institutionalist approach proposed by Campbell and Pederson to take into account the combined role of interests, ideas and institutions to explain the deployment of neoliberalism on the other hand (Campbell, Pederson, 2001). For the purpose of being concise, only the reasons underpinning the DOS neoliberalization agenda are discussed here, leaving the development and actual deployment of neoliberal rationality internationally to be explored in further works.

At the level of the ‘problem stream’, the geoeconomic and geopolitical crisis of the 1930s and then the Second World War created a favourable context for searching for new political solutions. The solutions formulated at the time were severalfold and covered a wide ideological spectrum, ranging from socialist dirigisme to anarcho-capitalism, including Keynesianism, neo-corporatism and social democracy. It is hardly surprising that these also included the idea of restoring liberal internationalism on a basis consistent with neoliberalism. Within this range of solutions, only some are currently being implemented, including neoliberal rationality.

In terms of the ‘politics stream’, the victory of the Democrats in the 1932 elections interrupted 12 years of Republican government, the party traditionally responsible for the protectionist policies practiced by the United States since the nineteenth century. President Roosevelt's need to ally himself with the pro-agricultural export Democrat leaders of the South explains his decision to appoint Hull to a prominent cabinet position. Although the 1932 victory was an opportunity to launch a ‘new deal’ policy, Roosevelt's governing strategy was anything but ideological. The president maintained an ambiguous relationship with the federal administrations, leaving a great deal of latitude to government agencies, allowing them to define their own agendas, in order to better arbitrate between the different solutions proposed to him (Schlesinger, 1958). This management strategy implied competition between government agencies and explains why some promoted protectionist agendas while the DOS concurrently defended a neoliberal strategy of economic openness. Such axiological empiricism opened windows of opportunity for heterogeneous and simultaneous spatial policy experiments.

In terms of the policy stream, the political advantage of the neoliberal solution was not immediately obvious, except to already convinced supporters of free-trade pacifism. During the 1930s, the weight of US exports remained relatively low compared to domestic demand and did not enable the recovery of foreign trade to become a widely shared priority. The reduction of tariffs also seemed unlikely to curb the expansionist tendencies of the Axis forces and prevent the outbreak of a new war. The neoliberal option, on the other hand, became more convincing from 1940 onwards, when the involvement of the United States in preparing a new world order after the war became inevitable: although the reflections undertaken to conceive the post-war period led to heterogeneous proposals within the administration (as illustrated by the Morgenthau plan for annihilating Germany or the proposals of the Under-Secretary of State Welles in favour of regionalizing the World), the geopolitical tensions exacerbated by the economic isolationism of the end of the 1930s gave credence to the ideals of free-trade pacifism and rendered them less idealistic. This is why Roosevelt supported his Secretary of State's project more diligently from 1940 onwards and why, after the latter's resignation in November 1944, he chose to appoint one of the most radical free traders, Clayton, as Under-Secretary of State in charge of economic affairs. On an external level, the free-trade solution did not imply any real risk for the US economy, despite vehement rebukes of certain Republican congressmen, while offering the possibility of an economic response to the global crisis and enabling the consolidation of the multilateral framework initiated with the United Nations and the Bretton Woods institutions.

The combination of these three streams opened a window of opportunity for institutional entrepreneurs to undertake reforms that would otherwise be impossible or much more complicated to implement. Hull's role in this respect was decisive: the simplicity of his convictions, the consistency of his efforts and his ability to stay in power for 12 years explain how, from an unexpected appointment as Secretary of State, he managed to institutionalize neoliberal rationality as the official agenda of the DOS. The Hull example shows the importance of agency in the process of neoliberalization, with some actors able to take advantage of particular structural configurations to initiate large-scale policy changes (Byman, Pollack, 2001).

From a complex neo-institutionalist perspective (Campbell, Pederson, 2001), the DOS case also showed how the impulse of neoliberal norms and the oppositions they encountered were based on the combined influence of ideological inspirations, rational interest rationales, specific actor systems and specific temporal dynamics.

Although Hull's personal ideological convictions played an indispensable role in the institutional construction of the neoliberal agenda within the DOS, his ideas became all the more acceptable when they responded to the geoeconomic interests of US exporting firms as suggested by the revisionist theses of the open-door policy (Gardner, 1971; Kolko and Kolko, 1972) or by class-based approaches (Woods, 2003). They also presented a possible remedy for the global economic collapse, a problem the US administration saw as one of the main threats to its post-war security from 1940 onwards. Falling short of considering a solution based on imperialist domination of the world through military force, the US had a geopolitical interest in supporting initiatives for a prosperous world, which is why the Morgenthau plan was abandoned and all initiatives to weaken German productive capacities after the war condemned.

Regarding the social organization of policy actors, the affirmation of the neoliberal agenda was facilitated by the constitution of a network of administrators within the DOS, selected on the basis of their adherence to the theses of free-trade pacifism, making it possible to create a convergence of views, to systematize and to institutionalize the neoliberal discourse from 1933 onwards, before the Cold War imposed itself from 1947. At the same time, the governmental technique developed by Roosevelt, which consisted of allowing a certain normative heterogeneity to be expressed between the different governmental agencies, enabled the DOS to develop a strategy that was relatively original and autonomous from those of the Treasury, Commerce, Agriculture or War departments.

In terms of temporal dynamics, the longevity of Hull's term of office (1933–44), coupled with that of Clayton (1944–47), explains how the repetition of initiatives in favour of free trade helped to trace a path of dependence in early neoliberalization. For example, the conditions under which the GATT was negotiated in 1947 derived directly from the framework within which the RTAA was conceived in 1934 and then systematically renewed thereafter (product by product, based on bilateral negotiations later extended via the MFN). The incremental strategy initially chosen by the DOS to promote its freer trade program, via case-by-case agreements forged to avoid any reproachful reaction from Congress, explains why neoliberalization took the form of a discreet and gradual process, the inception of which remains difficult to retrospectively grasp even today.

Beyond this initial impulse, it remains to be clarified why, despite an international context marked by a strong attachment to national protectionism, neoliberalization painfully continued thereafter, to the point of still imposing itself as a pervasive rationality at the end of the twentieth century.