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

Abstract

This chapter 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 Bohm and Friedrich August von Hayek, the subsequent sections 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.