A belief in the innate efficiency of competition masks that neoliberalism is a political project, not an inevitable one- a focus on competition perpetuates this ideology

Market Bureaucracy Neoliberalism, Competition, and EU State Aid Policy, Lund University, DOCTORAL DISSERTATION,

Reading Foucault’s lectures on Governmentality from the end of the 1970’s, there appears to be a parallel between state aid policy and what he described as a neoliberal rationality of government. In his lectures, Foucault talked about different ways of reasoning about the limits to government that have been dominant in different historical periods. For example, government has been limited with reference to the divine order of things, the natural and inalienable rights of human beings, or the sovereignty of other nation states. According to Foucault, neoliberalism can be defined as a rationality that relies on competition as a principle for determining the proper limits to government. Building on the assumption that free competition leads to economic growth, neoliberal thinkers argued that responsible governments would do what is good for competition in order to increase the well-being of their subjects. In this way, neoliberalism appears to promise a less intrusive government that will “leave things to the market” by respecting the selfregulating process of competition. My interest in this book is not with the historical development of ways of thinking about government but to think with Foucault in order to understand the way we reason about the proper limits to government today. State aid policy can be seen as an expression of a neoliberal rationality of government in that it seeks to limit government intervention on the market with reference to free competition. At the same time, state aid policy could be seen as giving rise to a paradox where the will to protect competition from government intervention has led to a surprising amount of government intervention. In order to keep the member states from distributing state aid, a whole range of government activities have been put into place. There has been an explosion in the number of regulations, case law, communications and guidelines from the EU institutions, aimed at making sure that governments do not distort competition. State aid policy has grown from a few articles in the EU treaties to an intricate system of rules covering a broad spectrum of policy sectors and different types government measures. New administrative procedures have been introduced in which the member states must notify the Commission about their plans to grant state aid and wait for approval before implementing them. National competition agencies have been organised in a European Competition Network where they engage in the exchange of information and best practices. The need to know how to interpret the rules has led to a demand for new courses that provides training in EU law, leading to the creation of a new kind of expertise. This situation, where the creation of “free competition” and the expansion of government intervention go hand in hand, will only appear paradoxical if we believe that markets will regulate themselves, as by an “invisible hand”, if only governments can be kept from interfering. This is a notion that has been refuted time and again but which appears curiously difficult to shake (see Harcourt 2011). As argued by Polanyi, the capitalist market order was not the result of a spontaneous process or laissez-faire, but the “outcome of a conscious and often violent intervention on the part of government which imposed the market organisation on society” (1944/2001, p. 258). He claimed that rather than doing away with the need for control and regulation, the introduction of “free markets” have increased their range (Ibid., p.140). In a similar vein, David Graeber’s frustration with the bureaucratic nature of contemporary government led him to formulate an “iron law of liberalism” according to which “any market reform, any government initiative intended to reduce red tape and promote market forces will have the ultimate effect of increasing the total number of regulations, the total amount of paperwork, and the total number of bureaucrats the government employs” (Graeber, 2015, p. 9). Markets do not regulate themselves, they are regulated by governments (see Vogel, 1996). Even though most people would probably agree that markets are (to some extent) dependent on government intervention, we still tend to speak about the relationship between state and market as if it was a zero-sum game, where more of one thing leads to less of the other. This is not surprising considering the way we are trapped in a language that constantly reifies the impression of state and market as two separate spheres. Terms such as free competition, liberalisation, and deregulation are constantly opposed to government intervention, planning and regulation. As argued by Harcourt (2011, p. 32) these kinds of conceptual tropes hinder rather than help by projecting the image of the market as a “natural order” rather than a political one, thus shielding what happens in this sphere from political and moral debates. It is clear that we cannot understand how we are governed by thinking within the framework of a state-market dichotomy. If we only think in terms of either/or, more or less, we will fail to see how policies which claim to “leave things to the market” are not resulting in less government, but in a particular kind of government. This dissertation sets out to investigate how a particular way of reasoning about the limits to government with reference to competition is shaping the practices of government. I want to understand how the EU, through its state aid policy, is shaping national governments into particular kinds of subjects that will reflect on their own behaviour in terms of its effects on competition.