What was neoliberalism, is it dead, and was it really so bad?
I’ll answer these questions in reverse order:
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Of course neoliberalism was bad. It’s what gave us Donald Trump.
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Some people think so. We shall see.
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It was the consensus approach to running the country for the last 40 years.
Chances are you’re now thinking: The consensus approach was neoliberalism? I’ve never heard of neoliberalism. And after decades of the two political parties being at each other’s throats, you’re telling me we had a consensus approach?
Yes. That’s why everybody was so pissed off.
I admit this is confusing. High time we got things cleared up.
We can’t start at the beginning, because that’ll make things even more mystifying. Better we should start in the middle: Who says neoliberalism is dead? The British economist Umair Haque, for one.
I don’t claim Umair is a leading authority on neoliberalism; he’s more a canary in a coal mine. I know about him because Medium, the online publishing platform, periodically sends me links to his essays. Umair is an excitable fellow, given to dire pronouncements full of exclamation points and italics. For the most part, he’s not high on prospects for the world in general or the U.S. in particular. One of his recurring themes is that the U.S. is a failed state.
So he caught my attention when, in a recent piece, he declared Joe Biden’s State of the Union address last month was historic, and that Biden was “one of America’s most consequential Presidents for decades.” Jiminy, I thought. This bespeaks a seismic shift.
Here’s Umair’s summary of the President’s speech:
Neoliberalism’s done. It didn’t work. It led to economic stagnation, which led to social degeneration, and that produced MAGA Trumpism. But MAGA Trumpism, of course, doesn’t work either — it doesn’t solve anything. And neither does the old-school conservatism — nobody should have healthcare!! Insulin!! Everything should be run for maximum profit — that aligned so neatly with 90s era neoliberalism. These ages of American politics are done … We are going to try something new.
One guy’s eccentric opinion? Not really. Robert Reich, secretary of labor under Clinton, has made essentially the same argument, although he doesn’t use the term neoliberalism. But it’s more instructive to get an outsider’s perspective, so let’s stick with Umair.
It’s always heartening to be told it’s morning in America. However, since Umair doesn’t define neoliberalism, most American readers – and by and large it’s Americans who are confused about this – won’t have any idea what Biden is delivering the nation from. Many will find the reference to “90s era neoliberalism” especially puzzling. Is Umair suggesting Biden is going to rescue us from the lingering horrors of the Clinton administration?
Not to put a fine point on it, yes.
This isn’t getting any clearer, is it? Sorry, but things are going to get worse before they get better. We turn to the “neoliberalism” entry in Wikipedia:
Neoliberalism … is a term used to signify the late-20th century political reappearance of 19th-century ideas associated with free-market capitalism after it fell into decline following the Second World War. A prominent factor in the rise of conservative and right-libertarian organizations, political parties, and think tanks, and predominantly advocated by them, it is generally associated with policies of economic liberalization, including privatization, deregulation, globalization, free trade, monetarism, austerity, and reductions in government spending.
No doubt this raises some questions in your mind:
So neoliberalism is basically a conservative thing?
Its leading proponents have been conservatives, yes.
But Bill Clinton, a Democrat, was also a neoliberal?
Clinton’s detractors on the left often describe him that way, and a number of the major policy initiatives during his tenure were unquestionably neoliberal in character, including the North American Free Trade Agreement (NAFTA), the welfare reform legislation of 1996, and, in 1999, the repeal of provisions in the Glass-Steagall Act limiting the ability of commercial banks to engage in investment banking. The repeal bill was sponsored by Republicans but, once it got through Congress, Clinton promptly signed it. Critics of neoliberalism say this instance of deregulation was at least partly responsible for the financial meltdown of 2007-2008.
In other words, even though Bill Clinton and the Republicans hated each other’s guts, they were all neoliberals.
Right. Reich, who worked for Clinton, slides over this essential point in the essay I linked to above.
And that’s why we got Trump.
There were some intervening steps. But essentially that’s correct.
Where do neoconservatives fit into this? Were they the opposite of neoliberals or the same?
Neither. The two were in different worlds. Neoconservatism was a relatively short-lived, strictly American intellectual movement best known for advocating an interventionist U.S. foreign policy. Neoliberalism is – it’s premature to say was – an economic philosophy of worldwide impact whose roots go back most of a century. Still, the two have some things in common, one being a knack for disaster. The neocons got us into Iraq, while the neolibs had a hand in an entirely different set of calamities, the most famous of which prior to Trump was the Pinochet regime in Chile. (Not saying the Chicago Boys brought Pinochet to power, but they were consorting with a pretty unsavory group.) Another trait the neos share is that they make hash out of conventional labeling. Whereas neoliberals up until the Clinton era tended to be mostly conservatives, a lot of neoconservatives were former liberals or even leftists. Irving Kristol, guiding star of the neocons, had once been a Trotskyite. And of course military adventurism had once been the province of liberal Democrats, who gave us the war in Vietnam.
This is making my head hurt.
We’re not done yet. We now turn to the neoliberalism entry in the Stanford Encyclopedia of Philosophy, which will put your bafflement on a more rigorous basis. From this we learn that neoliberalism “is now widely acknowledged … as a controversial, incoherent, and crisis-ridden term, even by many of its most influential deployers” – or, as another observer put it, a “political swearword” used to describe anything leftists don’t like.
You think this is helping?
Patience, we’re getting there. The encyclopedia gamely argues that, notwithstanding the foregoing criticisms, neoliberalism, as propounded by the political economists James Buchanan, Milton Friedman, and F.A. Hayek, constitutes a coherent and enduring economic philosophy placing great stock in free-market capitalism, limited government, and the rule of law, as reasonably well described in the Wikipedia entry cited above. Something it evidently thinks its academic audience needs to hear.
We’re going around in circles.
On the contrary, just obliquely making a point: to understand neoliberalism is to understand the critique of recent history by the left.
So, on to the big finish:
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From the 1930s onward, the prevailing economic philosophy in the U.S. was Keynesianism, which called for government intervention in the marketplace to ease capitalist hiccups such as the Depression. In the U.S. this became known as New Deal liberalism, the promoters of which were Democrats, who were opposed by conservative Republicans. So liberal vs. conservative became the standard American lens for looking at the world.
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But liberalism had a different meaning elsewhere. In the UK, the main political split was between the Conservatives and the Labour party, which for years was avowedly socialist. Liberals were committed to free markets but had a range of views otherwise, with social liberals on the left and classical liberals on the right. On occasion politicians in the UK will speak of being liberal conservatives, which in the U.S. would make no sense. Same with the term neoliberalism. Works in the UK, here it doesn’t compute.
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In the late 1970s, the U.S. and UK economies were stagnant, and Keynesian remedies weren’t working. Margaret Thatcher in the UK and Ronald Reagan in the U.S. swept into office on the strength of what we now recognize as neoliberal ideas, although nobody here called them that – deregulation, lower taxes, and (although this didn’t seem like a big deal at the time) free trade.
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We skip ahead to 1992. Bill Clinton has just been elected. Nobody’s fool, he recognizes the popularity of Reaganism and doubles down, pushing through NAFTA and embracing globalism. Which, for a while, seems like a brilliant plan. U.S. companies shift their manufacturing operations to Asian countries, whose economies boom. Millions are lifted out of poverty! Democracy replaces communism! Humanity seems poised for unprecedent bliss!
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We all know how that worked out. Globalization was great for us college-educated swells who could buy cheap computers and jeans, but, for blue-collar folks whose jobs had been shipped out of the country, it sucked. And nobody in the political leadership of either party fully grasped that. They’d all signed up for neoliberalism with only the haziest notion of its implications. Meanwhile, in the wings was a guy with no distracting principles, a gift for telling people what they wanted to hear, and a bad combover. The rest you know.
Something to think about, no? Even if you don’t buy the idea that neoliberalism was intrinsically evil, it’s difficult to avoid the conclusion that it gave us Trumpism and much that led up to it – catastrophic job losses, the disintegration of communities and the problems that entails, widening income inequality, an inadequate social safety net, you name it. In other words, one of the great crises of democracy was caused by bitterness arising not from what we were ostensibly fighting over, but from something we agreed on, to the extent we thought about it at all – and by we I mean us supposedly enlightened folk who were the chief beneficiaries.
OK, 20/20 hindsight. Not saying any of this excuses continuing manifestations of deplorableness. But it puts things in a new light.
– CECIL ADAMS
After some time off to recharge, Cecil Adams is back! The Master can answer any question. Post questions or topics for investigation in the Cecil’s Columns forum on the Straight Dope Message Board, boards.straightdope.com/.