The age of neoliberalism is ending in America. What will replace it?
The neoliberal order that dominated American politics for 40 years is coming apart. This order prized the free movement of capital, goods, and people. It celebrated deregulation as an economic good that resulted when governments were no longer allowed to manage markets. It valorized cosmopolitanism as a cultural achievement, the product of open borders and the consequent voluntary mixing of large numbers of diverse peoples. It hailed globalization as a win-win position: the west would be enriched but so would the rest – Latin American countries and Asian nations, large and small. There would be no losers in this global project – not among the working classes of the west nor among the peoples of the global south. Globalization and free markets would lift all boats. In America, the neoliberal order transcended party lines, compelling all those who wanted political power to subscribe to its core beliefs. Ronald Reagan was its most prominent architect, Bill Clinton its key facilitator, converting the Democratic party to its core precepts.
The promise of neoliberalism could not survive the economic wreckage of 2008-09. Millions lost jobs and homes. The economic inequality long characterizing the neoliberal world now widened further, as governments did more to bail out the investing classes than those who lived by wages alone. Many among the latter began to lose faith in neoliberalism and then in democratic government, the latter now accused of exploiting “the people,” either through gross economic mismanagement or through complicity in maintaining a system ostensibly committed to popular rule but in reality rigged to favor the “best” over the rest.
The fracturing of neoliberal hegemony opened politics to new voices. Donald Trump shocked the political establishment both with his crude style and with rhetoric that struck at the heart of neoliberal orthodoxy: free trade was a chimera that had done nothing for America’s working man; America’s borders had to be established, walls built, immigrants expelled, and globalization reversed. Bernie Sanders’s rise on the left was equally astonishing, his influence on American politics greater than that any other American socialist save for Eugene Victor Debs himself.
The real estate huckster from Queens and the socialist shouter from Brooklyn were worlds apart on many political issues. But both attacked globalizing economic agendas, the privileging of free trade over the needs of America’s working men and women, the evisceration of American manufacturing, and the corruption of America’s political system by elites. Both men generated intense levels of support that convulsed the parties with which they were allied. Partisanship hardened during their rise, making politics both more exciting and more volatile, patterns that the Covid pandemic only intensified.
What lies ahead? If Trump gets his way, America may devolve into an authoritarian state in which the country’s democratic institutions are made subservient either to the decrees of ‘the great leader’ or to an oligarchic Republican party able to manipulate electoral processes to keep itself in power even when a majority of Americans vote to oppose its rule. Such a regime would seek both to fire up America’s shrinking (and thus vulnerable) white majority with ethnonationalist appeals and enrich regime members by striking lucrative and mutually beneficial deals with capitalist elites. We know something about how these regimes operate: they were common in Latin America and Africa across the second half of the twentieth century – and were endlessly castigated by US observers then for betraying democratic principles.
The Sanders road runs through Joe Biden who, ironically, long kept a healthy distance between himself and progressive causes. But now the new president, grasping the magnitude of the moment and understanding that this is likely to be his last tour of public duty, has decided to channel the spirit of Franklin Delano Roosevelt, America’s most successful Democratic president.
Roosevelt himself broke with free market dogmas, insisting that the federal government had to manage capitalism in the public interest. He undertook major projects of infrastructural improvement, understanding their importance both for economic growth and for demonstrating in visually dramatic ways the Democratic party’s ability to transform for the better the everyday world in which Americans lived and worked. He opened his Democratic party to the left, believing that such an alliance would enhance, rather than imperil, the chances of reform. He understood the need to reinvigorate democracy in the US at a time when it was on the defensive in most of the rest of world.
Biden hopes to make each of these Rooseveltian projects his own. But he lacks FDR’s congressional clout. Roosevelt possessed a congressional base in 1932 larger than Biden currently enjoys, and he increased it in 1934 and 1936. To rival Roosevelt’s success, Biden will have to do the same in 2022 and 2024. Republicans understand the stakes of 2022 and 2024 all too well, which is why their state legislators are working day and night to jigger electoral procedures and districts in ways that advantage their party.
Can Biden nevertheless pull off a New Deal for the 21st century, appropriately festooned in 50 shades of climate-friendly green? The odds are against him. But Vegas oddsmakers (and their pollster soulmates) have shown themselves to be shaky guides to political behavior during this tumultuous era. Biden has had two big policy successes – the vaccines rollout and the nearly $2tn dollar American Rescue Plan. He needs two more, likely to be a conventional infrastructure plan passed with bipartisan support, and then a second, unconventional infrastructure plan that is both green and focused on “social” rather than physical infrastructure, passed through reconciliation. If, as a result, the economy begins to hum; if the American landscape begins to bloom with new roads, bridges, rail lines, and recharging stations; if hope in an American future thus rebounds; and if the Democrats can find 50 (or even 20) versions of Stacey Abrams, each able to make the Democratic party the force it became in Georgia in 2020: then Biden will have a shot at beating the oddsmakers, and at giving America a political order that many would be proud to call progressive.
Gary Gerstle teaches at the University of Cambridge. He is writing The Rise and Fall of America’s Neoliberal Order (2022)
Roosevelt broke with free market dogmas, insisting the government had to manage capitalism in the public interest