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WN: The article highlighted offers some fascinating analysis.
Neoliberalism may not be dead, but it is no longer the unquestioned ideology of our time. That leaves a huge opening for those on the Left who want to see a political and economic order based on democracy and solidarity rather than unbridled profit-seeking.
A political movement becomes a political order when its premises start to seem inescapable. In the 1950s, Republicans bowed to political reality and supported New Deal social welfare programs; in the 1990s, Democrats embraced Ronald Reagan’s deregulatory zeal.
But as historian Gary Gerstle argues in his new book, The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era, no political order is immune to the destabilizing power of economic crises.
For Gerstle, 1970s stagflation undermined the New Deal order just as the Great Depression had helped bring it into being. And today, in the shadows of the 2008–9 Great Recession, with inflation galloping ahead and the pandemic still stretching across the globe, the neoliberal order seems to be faltering. What, then, might come next?
Jen Pan asked Gerstle this question and more on a recent episode of The Jacobin Show, a YouTube series and podcast from Jacobin. In their conversation, which has been edited for clarity and length, Pan and Gerstle discuss how Donald Trump and Bernie Sanders are right- and left-wing symptoms of the neoliberal crack-up, how the New Left unwittingly aided neoliberalism’s rise, and why he thinks “capitalism [isn’t] in the driver’s seat” at this tumultuous moment.
A political order is a constellation of institutions backed by a political party, involving networks of policymakers and people who seek to define the good life in America. It is a structure in politics that allows a movement to gain authority and power over a long period of time.
When Steve Fraser and I wrote about the New Deal order, which arose in the 1930s and ’40s and fell in the 1960s and ’70s, we argued that a key test for a political order is whether it can compel the antagonistic party, in this case the Republican Party, to play by Democratic Party rules. In other words, certain core beliefs become so deeply established, so hegemonic, that they define the playing field. And thus, when a Republican president was elected for the first time in twenty years in 1952, the big question was, would he take apart the New Deal? He did not; he preserved the core pillars of the New Deal, including labor rights, Social Security, and a progressive income tax that exceeded 90 percent.
What is it that compels an opposition party to play by the rules of the dominant party? The answer is a political order. Not everyone in America has to speak that language — but if you want to get elected, if you want to have political influence within the dominant structure of politics in the United States, you have to speak that language.
The neoliberal order arose with the Republican Party in the 1970s and ’80s. It became an order, I argue, when Bill Clinton, in the 1990s, brought the Democratic Party on board. Clinton arguably did more than [Ronald] Reagan himself to facilitate the tenets of the neoliberal order: the commitment to deregulation, the celebration of globalization, and the idea that there should be free markets everywhere. That indicates the political movement of neoliberalism had established itself as an order, with the ability to define the terrain of American politics.
We are living through what I argue is the end of the neoliberal order. That does not mean that ideas of neoliberalism will disappear. After all, Social Security is still around, but the New Deal order is not. There will be elements of neoliberal thinking that continue to characterize American life for a long period of time.
In the eyes of many New Leftists, even the New Deal agencies set up to regulate capital had been captured by private interests. They were no longer regulating oil or steel or other companies in the public interest; the regulators were serving the interests of corporations and the interests of capital. So what emerged as part of the New Left was an anti-statism and a privileging of the individual and his or her consciousness over all large structures, public and private, that might unduly constrain their freedom.
Once you enter that line of thinking, you begin to see how there could be an intersection between some ideas of the New Left and neoliberals. That’s not to say they merged, and I’m not making an argument that the New Left sold out. It’s not an argument about people pretending to be one thing and in their souls being another. It’s more a story of how critiques of established structures from the Left emerged in ways that brought them into conversation with people on the other side of the political spectrum.
One of the concrete ways this manifested was in the computer revolution. It was the dream of Apple, Steve Jobs, and Stewart Brand — who was a hippie and wrote one of the bibles of hippie-dom, the Whole Earth Catalog — to free the individual from all structures of oppression. That is how the New Left begins to contribute to the development and ultimate triumph of neoliberal thinking.
J.C. Pan When did the end of neoliberalism begin, and what are the factors bringing about this decline?
Gary Gerstle There are always cracks in a political order. Political orders are complex formations. They bring together institutions and constituencies that on some key issues see eye to eye and on other issues don’t. So there are always tension points, and there are always points where things can diverge.
George Bush, I think, set the stage for the crisis of neoliberalism in two ways. He pursued a cheap money housing policy, which in his mind was meant to increase minority homeownership in the United States. Because he was not willing to appropriate actual money for this — that can only be done by extending debt and mortgages to people who had previously been denied mortgages by banks — it set them up for failure. Again, this could happen because of the utopianism surrounding the technological revolution.
Bush also tried to reconstruct Iraq on a neoliberal foundation. He threw away the plans that the United States had used to reconstruct Germany and Japan after World War II and basically handed the job of reconstruction to private corporations, most of them US-based. Through his agents in Iraq, he also dismantled the entire infrastructure of the Iraqi economy, enacting a shock therapy which neoliberals believed was the only way to deal with bloated states that had not succeeded at economic development. This neoliberal experiment was brutal for the Iraqis; it led to civil war within Iraq and exploded Bush’s popularity.
The combination of Bush’s Iraq policy and the housing crisis leading to the Great Recession persuaded a lot of Americans to think more seriously about the kind of political economy that they had committed to through their political leadership.
Protest developed slowly. But over the 2010s, the protests were quite extraordinary, beginning with the Tea Party on the Right and Occupy Wall Street and then Black Lives Matter on the Left. There was the reemergence of socialism on the Left and a powerful ethno-nationalist protectionism in the form of Donald Trump on the Right. The 2016 election delivered the shock. The two most powerful and important people in that election, Donald Trump and Bernie Sanders, were unimaginable as significant political figures in the heyday of neoliberalism. That election was when I decided to write the book.
The neoliberal order compelled all players in politics to abide by a certain set of beliefs and rules, and that clearly is not the case today. That doesn’t mean socialism is coming, but it does mean that the orthodoxy and the power of neoliberal thinking has suffered.
The New Deal order was defined by a kind of compromise between capital and labor, while the neoliberal order represented a triumph of capital over labor that resulted in a massive upward transfer of wealth. It stands to reason that capitalists would be very invested in preserving the neoliberal order, much more than they were the New Deal order. Do you see signs of other political orders forming? Or do you think that capital can revive the neoliberal order?
Gary Gerstle Are capitalists going to do everything they can to retain their wealth and privilege? Absolutely. But it’s not clear that they are going to be able to do that. Part of the lesson of the New Deal order is that there are circumstances that will incline capital to compromise in ways they may not wish to, but nevertheless feel compelled to, as the best of the alternatives facing them. An important question now is, what will strike fear into the hearts of capital? What will incline them to compromise?
One important factor is the reemergence of the labor movement. We’re seeing signs of that, but not at the point where it can command the heights. However, the labor revolt of the 1930s had very modest beginnings.
I don’t see this moment as one in which capitalism is in the driver’s seat, managing things in its interest. Could the outcome of our current crisis be the reemergence of a neoliberal order, deeply privileging capital, by the end of the 2020s? Yes, that is a possibility. But it’s only one of several possibilities. I think that we are in a moment of inflection, we are in a moment of transition, and we don’t really know what the shape of the world is going to be in five or ten years.
Gary Gerstle is a professor of American history at the University of Cambridge and a columnist for the Guardian. His most recent book is The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era.
J. C. Pan is a cohost of The Jacobin Show and has written for the New Republic, Dissent, the Nation, and other publications.
Please click on: The Neoliberal Order Is Crumbling.