On a Nazi and a Nürnberg prosecutor in the history of Neoliberalism

In fact, the British case against the expropriation of Anglo-Iranian Oil was one of the most important signals to the inter-national business community that new standards were necessary for more robust protection of foreign property. The German Society’s president, the Deutsche Bank head Hermann Josef Abs, who had over-seen the expropriation of Jewish property in the Third Reich, became an international spokesperson for property rights in the second half of the 1950s. After the Society drafted an “International Convention for the Mutual Protection of Private Property Rights in Foreign Countries,” Abs made his case before the American Society of International Law in 1956 and, most influentially, in a San Francisco speech at the International Industrial Development Conference on October 15, 1957, in which he cited the ICC statement. The speech, titled “The Safety of Capital,” was reported in Time magazine under the headline “A Capitalist Magna Carta” in an issue that featured Ludwig Erhard on its cover. Abs’s proposal opened an international conversation on the rights of the investor. His “capitalist Magna Carta” would oblige signees to abstain from “direct or indirect illegal interference” with “foreign cap-ital” and would create an International Court of Arbitration to judge violations. Investors could turn to the third-party court first, without using local courts. To punctuate the need for his code, Abs brought up the recent cases of the expropriation of the Anglo-Iranian Oil Company, the United Fruit Company in Guatemala, the Suez Canal, Dutch land in Indonesia, and foreign-owned power plants in Argentina. For Abs, like the ICC, the UN had become an enemy accomplice of the property thieves, passing resolutions supporting the idea that “expropriations are permissible at any time without compensation.”That an individual who had been an active participant in processing the expropriation of the property of German Jews would later be actively defending property was incongruous, but Abs did not act from amnesia or repentance. In his San Francisco speech he made a point of raising Cortney and Röpke’s bugbear issue of foreign holders of accounts of German banks who were “still waiting for a fair settlement.” Abs was the man who signed the document forgiving Germany’s massive war debt in 1953, and it is known that he did so in the belief that it was not forgiveness per se but instead a just settling of accounts for the German assets seized abroad. Abs’s campaign for investor protection was a continuation of the dogged commitment to the economic constitution dividing the public world of states from the private world of property. Part of his original proposal, described by an observer as “idealistic,” would have made alien property immune from confiscation during times of war...

Combined with the work of a group of British attorneys under Sir Hartley Shawcross, Abs circulated a “Draft Convention on Investments Abroad” for comment in 1959. The document was concerned entirely with the protection of the property of “nationals,” which were defined not as individuals but (following the ICC code) as “companies,” including “both juridical persons recognized as such by the law of a Party and associations even if they do not possess legal personality.” The legal experts who commented on the convention were not encouraging. The preamble of the convention presented itself as a “restatement of principles,” one expert noted, but “in several respects, it is clearly a good deal more than that.” They saw the convention as unprecedented in the protection it gave the foreign investor. In every instance, it tipped toward the investor, dismissing “public interest” as a reason for expropriation, allowing investors to turn to an international court before national courts, and breaking with current practice by forcing compensation to be made in the investor’s own currency and making the primary object of protection the company rather than the individual. By referring to both “direct” and “indirect” expropriation, the Abs-Shawcross convention even anticipated the later inclusion of “regulatory expropriation” in international codes.--Quinn Slobodian (2018). Globalists : The End of Empire and the Birth of Neoliberalism. Cambridge, Massachusetts: Harvard University Press, 139-141.

One of the most fascinating features of Slobodian's book (recall) is connecting intellectual developments within neoliberalism to the development of international law. Along the way he makes a compelling case that Geneva neo-liberals played a key role behind the scenes in developing the global architecture within and beyond the Bretton Woods structure. A point I return to before long.  Here I want to offer some critical remarks about one of Slobodian's historiographic techniques that are clearly intended to cast neoliberals in the worst possible light.

So, for example, until I read Slobodian's book I knew little about the proposed Abs-Shawcross convention and its indirect impact on, and recent controversies about, the role of arbitration panels in contemporary bilateral investment treaties (including why they are criticized). It's the kind of connection that makes Slobodian's book so valuable and interesting; this is a terrific intellectual history that illuminates existing practices of our own times. I write 'indirect' because the proposed Abs-Shawcross convention was, as Slobodian reveals, initially rejected as a multilateral regime due to firm opposition.  So far so good.

But it is notable that Slobodian calls significant attention to Abs' role as a Nazi. I don't think Slobodian is wrong to do so. Abs' life is striking, and there is no reason to offer him the benefit of the doubt about his particular motives. But the implication of Slobodian's framing is that neoliberalism is tainted by Nazism. This is especially notable because Slobodian is not exactly adamant here, and elsewhere, to remind the reader of neoliberal criticism of, and even opposition to, Nazism or racism more generally.* 

But it is by no means obvious one should interpret Abs as a neoliberal, or even a fellow-traveler. I am unfamiliar with any evidence that he studied with neoliberals, attended their seminars, or was held in high esteem by them. I don't mean to deny that the foreseeable effect of Abs-Shawcross convention would be a policy that neoliberals would like. It would increase the protection of property invested abroad by corporations, their shareholders, and individuals. I think Slobodian does not emphasize  -- and this is what makes the proposed convention genuinely liberal -- the expansion of scope of legal protection to individuals who would have increased standing in international law against the state-centered doctrine of sovereignty of states. This was a route to remedy state sponsored attacks on the individual. The Abs-Shawcross convention is, in fact, explicit (in its own comment on Article III) that this is modeled on, and part of, the expanded protection of human rights for individuals. (It quotes UN Resolution 390A.)

I do not think this connection to human rights is an accident. Not because I think Abs developed much interest in human rights. But, rather, because of Shawcross. It is notable that Shawcross is not remarked upon at all. For, Shawcross once a major Labour politician was "a British barrister and politician and the lead British prosecutor at the Nuremberg War Crimes tribunal. He also served as Britain's principal delegate to the United Nations immediately after World War II." Later in life he founded JUSTICE, an important human rights organization. Now, to be sure, while drafting the Abs-Shawcross convention he was counsel to Shell (see here). So, I don't mean to suggest he was not also defending corporate interests. Interestingly enough, unlike Abs, there is a plausible connection to neoliberalism in his life: Shawcross studied at LSE and law at Geneva University (a bastian of the Geneva school of neoliberalism). So, Slobodian could have connected the convention to neoliberalism through Shawcross. But Shawcross is a much more sympathetic character than Abs.

In addition, one may think the link with human rights law if not far-fetched than at least a rhetorical fig-leaf. But recent research by Yuliya Chernykh suggests that Elihu Lauterpacht played a major role in drafting the Abs-Shawcross convention. (Lauterpacht helped develop the dispute mechanism.) Elihu Lauterpacht was the son of Hersht Lauterpacht, one of the founders of modern international human rights law, and himself a contributor to the field. Of course, Lauterpacht was also involved in advising corporations (including Anglo-Iranian Oil).

I say this not to defend neoliberals come what may; as regular readers know (just read yesterday's post) there is plenty to criticize about neoliberals/neoliberalism. But I think it is a mistake to reduce Abs-Shawcross to the Nazi connection. It is possible to treat the involvement of Shawcross and Lauterpacht as mere brains for corporate hire who only incidentally expand the rights of individuals and provide mechanisms to give individuals remedies against state wrongs. But their interest in human rights law has been continuous and genuine throughout their careers. More important, within liberalism there is no necessary trade-off between doing what's right for individuals and making money advising corporations. The latter can be problematic, but need not be so intrinsically. To create a legal framework in which business uncertainty is removed and the law stabilizes expectations for powerful corporations and vulnerable individuals alike is a feature not a bug of liberal thought.

That it takes a Nazi banker-lobbyist to advance liberal ends is surely worth noting, but it is equally notable that his key collaborator was a prosecutor of Nazis. The origin of the rule of law is, alas, not in clean hands. 

 

 

*I don't mean to suggest that most neoliberals are especially praiseworthy. That's a different essay. 

Comments

[Matt]

Is ICC here International Chamber of Commerce? That would make sense in the context, but it's slightly unclear to me from the text quoted. (It can't be International Criminal Court, obviously enough.)

I have taught a lot of this in international business transactions classes, but not from this perspective, obviously enough. It's also perhaps worth pointing out that the historical alternative to arbitration panels in the case of expropriation isn't that the local people get the stuff, but rather gunboat diplomacy, coups, invasions, etc. Sometimes even imperfect and easily critiquable developments represent progress nonetheless. I don't mean to suggest that, because these developments were better than what went before, they are good as such. But, the development here often seems to me to be overlooked by their critics.

[Eric Schliesser]

Yes, the ICC = International Chamber of Commerce.
I made your point about gunboat diplomacy, coups, invasions, etc. in class, too. In particular, it was a means to prevent the experience of renewed colonial rivalry leading to new wars among would-be-allies against USSR.

[Matt]

Thanks. The ICC is an interesting organization. I'd be interested if there was a good book about it's history. It does a lot of good and unobjectionable things - standardized terms in contracts, arbitration panels that really are better than many local courts, etc., but of course also strongly pushes a line that is tilted towards business and investors, even when this is unreasonable.

[Eric Schliesser]

In the chapter I quote from, Slobodian does cover some of its history.