Of course, the corollary is that individuals are solely to blame for all of their failures. If we are all perfectly free in this competitive, individualistic Hunger Games, the losers deserve to lose. Luck plays no role in success or failure, though we all know that it does. Context doesn’t matter—who your parents were, if you had an inheritance, what kind of community you grew up in—though we all know that it does. But perhaps the most troubling feature is that because neoliberalism rejects the “collective society,” as Thatcher called it, it also rejects the possibility that broader trends or social structures restrict freedom and conspire against individual success. Economic crises, corporate fraud, deliberately racist laws, cronyism, the absence of regulation—none of these things matter. Except that they do.
Neoliberalism thus promises a specific kind of freedom: People are autonomous. Government is minimized. Markets structure choices. But after four decades of neoliberal hegemony, people seem to be lashing out and protesting all around the world. On the left and right, the one thing people seem to agree on is that the system is rigged against them. The sociologist Zygmunt Bauman puts it nicely: “Never have we been so free. Never have we felt so powerless.”4
Part of the reason for our powerlessness is neoliberal ideology’s approach to freedom. Political philosophers have long distinguished between two kinds of liberty. The first is sometimes called the liberty of the ancients, positive liberty, or public freedom. Positive liberty is the freedom to participate actively in self-government. The paradigmatic case is ancient Athens, where democracy meant that citizens gathered to make decisions and govern themselves. And in the mid-twentieth century, some political leaders and philosophers argued that the exercise of freedom required basic minimum social rights and conditions—housing, health care, income. Without them, positive liberty wasn’t achievable.
The second type of liberty is called the liberty of the moderns, negative liberty, or private liberty. Negative liberty is the freedom from constraints. It emphasizes things like the free choice of a personal religion and no restrictions on speech, but it is not focused on the exercise of self-government. Neoliberal freedom is framed within this philosophically liberal tradition. But it takes it to an extreme because neoliberal freedom is almost single-minded in its obsession with government regulation. Fear of government so dominates the neoliberal worldview that it crowds out virtually everything else, even if neoliberals on occasion acknowledge other threats to freedom. The explanation for this odd position might be historical. Neoliberalism emerged in response to authoritarianism during the Great Depression and World War II and was worked out during the Cold War struggle with communism. Because the challenge of the time was total government control with a collectivist economic valence, neoliberalism overcorrected—condemning government as the source of all problems and championing the supposed utopia of markets. Then with the end of the Cold War and the declaration of the end of history, neoliberals felt further emboldened.
But there is another way to look at negative liberty, and it is essential for understanding why neoliberalism failed. We can call it the freedom of the republicans, meaning those who believe in having a republic as a form of government. We could also perhaps call it the freedom of the progressives, after conservatives like Teddy Roosevelt and liberals like Louis Brandeis, who lived during the Progressive Era of the early twentieth century. Republicans and progressives alike feared power in any place and in any form, public or private, and they thought that power of any kind threatened freedom.
This broader approach shows the limitations of neoliberal ideology’s preoccupation with freedom from government. First, neoliberals pay too little attention to the fact that private parties can oppress individuals—and that this undermines freedom as well. When Wells Fargo opens millions of fraudulent checking accounts for consumers who don’t ask for them and then charges those consumers fees and torches their credit scores—that is a form of private oppression that undermines the freedom of those consumers. When an industrial company dumps toxic waste into a lake, destroying a space for fishing and swimming, that is a form of private oppression that undermines the freedom of swimmers and fishers. Many large employers now control virtually every aspect of their employees’ lives. They insert noncompete and no-poach clauses into contracts so the employees cannot work anywhere else. And on top of that, they pay low wages. These workers are not free. This is private tyranny, modern serfdom. Government is how we would normally prevent private actors from using force and fraud against us; government action can enhance freedom. Yet the strategies of maximal privatization and minimal regulation mean that neoliberals offer virtually no protection from these kinds of harms.5
The second problem is that neoliberal freedom undervalues the fact that private parties can use government to oppress people. When the rich and powerful can use money to elect and lobby officials or when they themselves roll in and out of government, they can skew the laws to serve their own interests. Some neoliberals are very concerned with this problem, but they think the solution is to reduce the scope of government action altogether: no government, no private capture of government. Senator Ted Cruz of Texas, for example, commented in a 2017 debate with Vermont senator Bernie Sanders, “If the problem is government is corrupt, why on earth would you want more power in Washington?” But this solution collapses us back into the first problem, leaving us facing the issue of private tyranny.6
Part of the issue is that neoliberals often make a cardinal error in comparing corrupt government to utopian markets instead of comparing either utopian government to utopian markets or corrupt government to corrupt markets. Because they assume that markets are utopian and that government is corrupt, they are willing to leave our fates to the marketplace. The problem is that humans are not always kindhearted, and markets are filled with predators hunting for their prey.
A third problem is what scholars call structural domination. The structure of the social and economic system itself can be oppressive and restrict freedom. Markets are a good example of this problem. As Professor Sabeel Rahman explains, in a market, it might be that “no single actor intends to create such an unequal social structure. Rather, each party is simply seeking its own advantage established by background laws. Yet the aggregate effect is to create situations like low wages, unemployment, or other market failures.” One of Hayek’s great contributions was to argue, following Adam Smith, for the value of the invisible hand. Hayek thought that because knowledge is diffused in the general public, the many millions of unconnected actions individuals take would lead to favorable outcomes, particularly when compared with government policymaking. But it also might be that the aggregation of thousands of self-interested actions leads to a selfish and predatory dystopia, not a free and fair utopia.7
The problem of structural domination is more challenging than the problems of private power and money capturing government. Structural domination appears to us to be natural, and naturalizing the system can lead to hopelessness. People resign themselves to private oppression and personal poverty. But the system isn’t natural. We are the ones engaging in thousands of decisions each day. And we created the laws of the marketplace that structure each of those decisions.
Finally, neoliberalism’s understanding of freedom leaves no room for the freedom to reject neoliberalism. If society is free to chart its own course, then it might choose public libraries and national health care. People might choose to regulate Wall Street speculation and toxic chemicals in food. Freedom means that people might choose not to be neoliberal. This is a problem for neoliberals, and it explains why, for all its anti-government rhetoric and ideology, neoliberalism often leads to a strong state. Thatcherism, for example, actually stripped power away from local governments and expanded the power of the central government at Westminster. It took a strong government to reverse decades of entrenched social democracy. As one historian of Thatcherism comments, “The citizens have to be forced to be free and enterprising, otherwise there is no g
uarantee they will be so.” A free economy requires a strong state.8
Indeed, neoliberalism has frequently been opposed to democracy because in a democracy, people might not choose neoliberalism. Historian Quinn Slobodian has shown in his book Globalists that the intellectuals behind neoliberalism strongly supported building international institutions “to inoculate capitalism against the threat of democracy.” The idea was that if international laws and institutions were designed in a way that systematically favored neoliberal goals, then democratic populations within nation-states would be constrained from regulating markets.9
Many prominent neoliberals were also fainthearted at best in their support for political freedom. Consider some of the responses to apartheid in South Africa from members of the Mont Pelerin Society. German economist Wilhelm Röpke argued that uncivilized peoples would not support capitalism, and so he supported apartheid outright. English economist William H. Hutt opposed apartheid—but also democracy. Instead of one-person, one-vote, he advocated for weighting votes by wealth so the economically powerful would determine policy. Hayek opposed apartheid as well, but he also opposed economic sanctions designed to pressure the South African government to change its racist policies. Why? Hayek thought sanctions would “destroy the international economic order.”10
The preference for neoliberalism over democracy was so strong that some neoliberals have even been willing to jump into bed with authoritarians to accomplish their goals. In the early 1970s, for example, the United States supported a military coup in Chile, overthrowing the democratically elected Salvador Allende and replacing him with General Augusto Pinochet. Thousands “disappeared,” thousands more were imprisoned and tortured, and all others were left in an authoritarian state of terror. But upon Pinochet’s seizing power, a set of economists trained at the University of Chicago worked with the government to implement a neoliberal economic agenda. Milton Friedman visited and offered advice, as did Hayek. Budgets were slashed, state enterprises privatized, regulations abolished, trade liberalized. The Mont Pelerin Society even met in Chile in 1981. At that session, economist James Buchanan argued in his paper “Limited or Unlimited Democracy” that if democracy was opposed to the neoliberal marketplace, then the only option was to curtail democracy. In an interview with El Mercurio, Hayek shared this sentiment, commenting that “a dictatorship… can be more liberal in its policies than a democratic assembly.”11
Neoliberalism by fiat might have been necessary at first, but the heart and soul would eventually change as Thatcher predicted. And when that happened, neoliberalism would appear to be normal, natural, invisible—and inevitable. This is why it was so important that New Labour and the New Democrats embraced the spirit of neoliberalism. Even though they often pursued neoliberal policies out of pragmatism instead of dogmatism, as Blair said, the consequence was to entrench neoliberal ideology into our social and political fabric.
Many left-of-center American commentators are often frustrated when they are characterized as neoliberals. They agree that neoliberalism refers, in most of the world, to “the Thatcher-Reagan revival of the political right based on dogmatic market capitalism.” But they argue that in the United States, it referred to a small handful of forward-looking Democrats in the early 1980s and that this group was not the same as the Reaganites. They are partly right about this—this is what Mort Kondracke was talking about the morning after Reagan’s victory. But they’re also partly wrong. The left and right neoliberals of the 1980s (and onward) are far more similar to each other than partisan identification might suggest.12
On policy issues, the center-left neoliberals’ core principles were strikingly similar to those of their right-wing antagonists: a focus on economic growth rather than the distribution of wealth in society, a skepticism of government, and reliance on economic theory and market solutions. In 1982, the historian Arthur Schlesinger Jr. observed that the center-left neoliberals had “joined in the clamor against ‘big government,’ found great merit in the unregulated marketplace, opposed structural change in the economy and gone along with swollen military budgets and the nuclear arms race. Far from rejecting the Reagan frameworks,” he said, “they would at most rejigger priorities here and there.” When neoliberal (Democrat) Paul Tsongas penned The Road from Here, even Mort Kondracke’s New Republic understood where he stood on the political spectrum. It titled its 1981 review, “Reaganism with a Human Face.”13
One of the important puzzles of neoliberalism is why anyone on the left embraced it. There are, I think, three answers. First, some people truly believed in neoliberalism. They thought deregulation, liberalization, privatization, and austerity were the best policy tools for the moment. The second explanation is financial: needing campaign cash, those on the left turned to corporate political action committees and wealthy individuals, and over time, their policies migrated to follow the money. The third answer is political. Center-left neoliberals first embraced the tools and rhetoric of their opponents for short-term gain. But the hangover of political constraints lasted long after those constraints had subsided. Over time, liberals would continue to trim their sails, offering an echo rather than a choice, perhaps more from habit and timidity than from reasoned conviction.
In the United States, the rise of the New Democrats was tied to successive losses in the 1980, 1984, and 1988 presidential elections. Businesses and trade associations had expanded their political involvement starting in the 1970s, but largely on the side of Republicans. Some New Democrats, like Congressman Tony Coelho of California, who ran the Democratic Congressional Campaign Committee, saw an opportunity to rebalance those financial flows by appealing to these corporate interests. Indeed, as early as 1985, Washington Post reporter Tom Edsall noted Coelho’s “ability to meld legislation and campaign contributions.” By their Cleveland convention in 1991, the emergent New Democrat coalition had broken with the old liberal approach in a variety of areas: it celebrated markets as an alternative to environmental regulation, pushed for vouchers to help the poor, and embraced protrade policies to the ire of labor unions.14
With the election of Bill Clinton, the New Democrats now had the White House and a bully pulpit from which to reshape Democratic politics. But in his first few years in office, Clinton didn’t fully embrace the mantle of New Democrat. In part, his early years were defined by missteps and by liberal policy proposals on gays in the military and national health care. In part, the New Democrats did not have enough support among insiders. As Bruce Reed observed, “We didn’t have enough followers in enough places, and the Old Democrats, they ran the town.” Clinton’s popularity dropped, and the result was the election of 1994, in which the Republicans gained control of the House of Representatives and the Senate for the first time in decades. It was divided government that saved center-left neoliberalism, pushing Clinton back to his New Democratic roots. As Al From, founder of the New Democrat Democratic Leadership Council, noted in a memo to Clinton after the midterm elections, “The increased polarization in Congress is an opportunity for you to seize the vital center of the political spectrum.” Clinton’s recaptured centrism would come to be known as the Third Way.15
There were actually three different strands of Third Way politics. One strand, the one most often remembered, was the political tactic of triangulation. Because liberal ideals were unachievable in a conservative era, a savvy politician could make progress by co-opting conservative agenda items and putting a liberal spin on them or by taking liberal goals and using conservative means to achieve them. Perhaps the classic, though crude, example is tax cuts. Liberals are for helping the poor; conservatives are for tax cuts. Triangulation suggests tax cuts for the poor. Was that a conservative policy or a liberal policy? The truth is, to paraphrase a Clinton phrase, it was both and it was different. Another example of triangulation was co-opting traditionally conservative agenda items—balanced budgets, deficit reduction, crime, welfare reform, parental controls for television—with the result of gaining bipartisan victori
es. Triangulation thus offered ways of gaining policy victories in a time of conservative hegemony and divided government.
The second strand of the Third Way was minimalism. Instead of seeking bold changes that would reshape the nature of state, society, and the world, policy minimalism embraced small changes—tweaks—that could be implemented relatively easily and justified preferably as technocratic changes. The paramount tool was the tax credit, and Clinton passed the child tax credit and lifetime learning tax credit. Over time, it seemed almost as if tax credits were the only tool policy makers knew how to use: there was the saver’s credit and the credit for the elderly or disabled; the American opportunity tax credit and the residential energy efficient property credit; the nonbusiness energy property credit and the health coverage tax credit. The list goes on and on and on. Instead of giving people money directly or building public institutions, tax credits enable people, at tax time, to benefit from activities they undertook during the year. But policymaking through the tax code is comparatively ineffective and exceedingly complicated. It means people have to know to take advantage of the credit at tax time, they actually have to take the credit, and in the process, it makes filing taxes more complicated and frustrating (which, in turn, doesn’t inspire a fondness for government). But with simple and direct public programs out of favor, policymaking through the tax code became the new normal.
The Great Democracy Page 4