Straight Dope 3/24/2023: What was neoliberalism, is it dead, and was it really so bad?

What was neoliberalism, is it dead, and was it really so bad?

I’ll answer these questions in reverse order:

  1. Of course neoliberalism was bad. It’s what gave us Donald Trump.

  2. Some people think so. We shall see.

  3. 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:

  • 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.

  • 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.

  • 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.

  • 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!

  • 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/.

Free trade figures significantly here as one of the ills of neoliberalism. Sincere question: given what we know now, what would the better alternative to free trade look like?

And free trade wasn’t what doomed manufacturing jobs, anyway. It was automation. Sure, we haven’t reached the point of a factory with no humans in it, but making anything nowadays still requires many fewer humans than it used to.

To me the defining characteristic of neoliberalsm was not the globalism side and more its inclination to continue the conservative platform of removal of social safety nets, rather than try and improve them.

Its pretty hard to claim neoliberalism is dead when both the “socialist” opposition party UK and the center left party currently in power in the US are solidly neoliberal in that sense.

I guess the protectionist era of the 70’s. Where things like foreign cars were better and cheaper, but they were not available to consumers because expensive cars that broke down all the time was the price we were paying to protect car manufacturing jobs in the US.

The US enjoyed a position of manufacturing supremacy after WWII, due to the rest of the world having just been used as a battlefield. As the rest of the world recovered, it became more competitive to the American worker.

I don’t think that globalization was the problem, the problem was that it was just assumed that the free market would find new jobs for the displaced workers. And at the same time as we were reducing blue collar jobs, we were making higher education more necessary and more difficult to obtain.

When manufacturers moved out of the cities, where they had more labor and environmental laws to follow, and moved them out to the rural areas that had plenty of labor being freed up from agricultural jobs and were desperate enough to allow their communities to be polluted, it destroyed cities like Detroit, which still struggles.

The movement of manufacturing out of the cities into rural areas allowed those rural areas to not only not dwindle to the new lesser needs of agriculture, but to in fact grow well beyond what they ever needed for agriculture. Then largely through automation and partially through offshoring, these jobs were eliminated, and it being rural areas, there was no value to any company to come in to replace them.

When these displaced workers were given a choice, between having a safety net that would support them and training to get them able to compete in the world economy, and a false promise to get their jobs back, they went with the false promise. That’s how we ended up with Trump.

Sorry, wait, the party in power in the U.S. has a platform of removing social safety nets??

What are you talking about?

Powers &8^]

E.g.:

Here in the UK, we got a taste of fanatical neoliberalism:

Premiership of Liz Truss - Wikipedia

Can you be a little clearer about what exactly you think is going on here and what party you think is responsible?

These were temporary measures for the pandemic, never intended as permanent increases to benefits.

Powers &8^]

No I’m not. I have most certainly heard of neoliberalism. What I’m now thinking is “there are certainly things it can be blamed for, but why on earth are you blaming neoliberalism for Donald Trump?”

oh, is this it?

Trump was not elected only or even primarily by blue-collar folks whose jobs had been shipped out of the country. That’s a myth. Quite a lot of people who were financially comfortable, even rich, voted for Trump. Quite a lot of blue-collar and otherwise poor people voted for Clinton.

Broken down by income bracket, 52% of voters earning less than $50,000 a year – who make up 36% of the electorate – voted for Clinton, and 41% for Trump.

But among the 64% of American voters who earn more than $50,000 a year, 49% chose Trump, and 47% Clinton.

To me, at least, “neoliberalism” represented a school of thought which emerged in the mid-eighties and which was committed to the goals, but not the methods, of classic American liberalism, and was best characterized by the 1984 candidacy of Gary Hart. Bill Clinton embraced a lot of that rhetoric with the whole “third way/triangulation” strategy.

As an example of that, Clinton’s approach on trade was to embrace free trade, while advocating retraining and other programs to ameliorate the negative effects of that free trade. Republicans, however, took the win on free trade, but stiffed Clinton on the retraining programs.

This article is a blatant attack upon one of our most popular and beloved posters – one so well-liked that he is mentioned in the titles of at least nine threads on one forum alone. Cecil should apologize to that poster forthwith, assuming he actually read the article.

This is not really true. Automation has served to replace jobs that were previously done by people but has almost always resulted in higher productivity and more employment rather than a net loss of jobs. Offshoring labor-intensive jobs to countries with dramatically lower labor costs definitely caused job losses that, which economically offset by cheap imported goods did impact wide swaths of the rural United States where manufacturing was a major industry. Manufacturers fought back by embracing automation, so it is true that most of those jobs aren’t coming back even if we enact protectionist policies, but it isn’t as if pre-NAFTA and Clinton granting China permanent “Most Favored Nation” trading status (essentially kicking off the globalist economy that caused China to become the dominant player in consumer product manufacturing) that companies were adopting automation just to reduce labor costs. If anything, what drove adoption of automation were labor unions, and Reagan breaking the back of the labor movement and allowing states to individually adopt broad “Right-to-Work” laws really retarded interest in investing in automation just for the sake of reducing labor costs.

As for neoliberalism leading to Trump winning the presidency in 2016, that is as pure of a post hoc ergo propter hoc fallacy as one could dream up. Setting aside that neoliberalism is not some kind of remotely coherent ideology the way “NeoConservatism” was but instead is really just an umbrella term for a bunch of different ideals (and @Cecil_Adams is correct that both the policies of the Clinton and GW Bush administrations fit equally under that shade, and with remarkably little policy distinction between them) about how the United States fits into and leads world both economically and politically, which are at odds with what other would-be or has-been superpowers think that role should be. It really has nothing to do with classical liberal ideals, or social progressivism, or anything else that might fall under the political banner of “liberalism”, and the consequences of economic globalism, while not perhaps entirely predictable, put the essential security and decision-making about critical elements of the domestic economy in foreign (and specifically the leadership of the Communist Party of China) hands.

That we are now in the situation where we cannot manufacture items critical to national security and public health like high performance microprocessors or melt-blown polypropylene masks is an inevitable consequence of that decision. Trumpism, on the other hand, is a populism movement fueled by long-simmering resentment that has just bubbled over because of the economic consequences (not just of globalism but deregulation of the banking industry, specifically with regard to mortgage and loans) but with roots that go back even before Reagan (who was definitely a “Trump Before Trump” in terms of rhetoric and disregard for laws he didn’t like) and straight to Barry Goldwater. The consequences of neoliberal political philosophy upon global trade may certainly have fed the tide of Trumpism but they were not the original cause that engendered it, and we were arguably coming to this point anyway, if not because of the 2007/8 mortgage crisis or loss of manufacturing jobs but because of the student debt crisis and demographic decline. If anything, we can expect more populist candidates (of which Bernie Sanders is most certainly one on the far-leftist side of the political spectrum) that continue to polarize by appealing to peoples’ fears and uncertainties about their place in the national economy.

Stranger

Plus Stranger that I would add that Trumpism was/is primarily driven my racial resentment, not economic-induced grudges. As well as a desire to implement fundamentalist/religious-inspired restrictive laws to punish the groups they hate. The economic stuff is just a convenient cover for their actual goals.

I read the article Cecil linked to. Assuming the guy is right and Biden is seeking to once again make the US a country that exports more than it imports, has he accomplished anything tangible that would budge the needle that way even a little?

Trump certainly dog-whistled to people with deep racist sentiments but that alone doesn’t account for the broad appeal that won him the presidency. It isn’t as if he did anything good for the people already suffering from economic calamity (and in many ways compounded it, especially for farmers) but part of his appeal was that he would bring in some kind of nebulous political change that would sweep away corporate interests and inside players. That he did exactly the opposite of that in so many blatant ways seems to have been lost on many of his followers, but in that regard he learned from the best, and by that I mean from the many “small government, balanced budget” conservatives who immediately increase deficit spending and vastly enlarge corporate entitlements almost as soon as they enter office.

Well, he granted approval for the Willows oil drilling project in Alaska.. What more can you ask for from our ‘Green New Economy’ president?

*ducking*

Stranger

Well played, sir.

This is kind of perplexing. You tell us that neoliberalism causing the election of Individual-ONE is pheph, yet in the subsequent paragraph, you outline the economic divide and resulting resentment precipitated by neoliberal policies that created the conditions that led to widespread support for alternative candidates such as Bernie and Individual-ONE. It sounds like, in the broader view, it is really not pheph.

(“pheph” has such a nice sound to it that it should become a proper word)

No, that is not what I wrote. Please review, specifically

Stranger