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  1. Ideas
17 June 2022

Out with the old: is neoliberalism really dying?

Despite our age of economic crisis, populism and pandemic, we may be living in the ruins of the neoliberal order for years to come.

By Jan-Werner Müller

The term neoliberalism is ubiquitous in political debate across the West. It commonly serves as a political affront, a synonym for capitalism red in tooth and claw. But since at least 2018, and the publication of Quinn Slobodian’s Globalists: The End of Empire and the Birth of Neoliberalism, historians have countered this habit; they remind us that the word was coined in the 1930s by intellectuals precisely to signal their break with 19th-century traditions of liberalism no less than with contemporary libertarianism.

The American historian Gary Gerstle belongs to neither camp. In The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era, his recent book and self-declared “history of our times”, Gerstle employs the term neoliberal to designate a particular American political order. “Order” here is a term of art; Gerstle defines it as “a constellation of ideologies, policies, and constituencies that shape American politics in ways that endure beyond the two-, four- and six-year election cycles”. This is far from elegant, but the basic notion is clear enough: Republicans and Democrats take turns in governing, but the parties do so within overarching frameworks of what constitutes legitimate government conduct, which can outlast multiple presidencies.

A sign of an established political order is that the party initially resisting this order’s core ideas eventually caves in and implements policies similar to those of the ideological victors. Franklin Roosevelt inaugurated the New Deal order in the early 1930s, but its crucial consolidation happened two decades later under a Republican president, Dwight Eisenhower (whose inaugural address was hailed by Lyndon Johnson as “a very good statement of Democratic programmes of the last 20 years”). In the 1980s, Ronald Reagan proved the “ideological architect” of neoliberalism, but Bill Clinton, writes Gerstle, played the role of “key facilitator” – the Eisenhower of the centre left, acquiescing in the neoliberal order.

[see also: Britain’s passé neoliberalism could leave it at a permanent disadvantage]

Gerstle rightly stresses that a political order – what others have called a “regime” and what the Italian Marxist Antonio Gramsci famously named “cultural hegemony” – cannot be established without an appeal to moral ideals. It is a mistake to view the past 40 years or so as a triumph for what is often misleadingly called “market fundamentalism”.

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The resistance to the New Deal (and varieties of social democracy in Europe) was justified in the name of morality, not material well-being. “Economics are the method,” Margaret Thatcher declared in 1981, “the object is to change the soul.” Her denial of there being such a thing as society is usually misinterpreted: she was not making the case for selfish individualism; rather, Thatcher was calling for people to be responsible for themselves, with the help of strong families and the “living tapestry” of something like civil society (rather than relying on the state). The fierce lay Methodist preacher turned prime minister wanted her flock to be morally, and practically, disciplined. Had Thatcher’s (and Reagan’s) doctrine simply come down to Gordon Gekko’s “greed is good”, it is hard to see how neoliberalism could ever have become the regnant doctrine of our age.

Gerstle shrewdly observes that ideological coherence is overrated. A political order will always contain tensions or even outright contradictions, which can be sources of strength: different outlooks will attract different constituencies. Neoliberalism had a distinctly neo-Victorian strand stressing “family values” – neoconservatism plus the morals Thatcher had in mind when she sought to change British souls. But another strand, Gerstle writes, was a form of “cosmopolitanism” more akin to libertarianism: a supposedly “deeply egalitarian and pluralistic” belief in “open borders” and diversity resulting from different people freely mixing. It took both the stern moralistic mistress Thatcher and the easy-going, formerly dope-smoking sax player Clinton (plus Cool Britannia Blair) to make neoliberalism truly dominant in the Western world.

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But the danger is that if an order can contain everything and its opposite, the concept loses force in explaining historical outcomes; while, politically, it might seem that resistance to it was futile all along. Gerstle struggles to make good on the claim that the New Left should be seen as part of the neoliberal ascendancy. Although there is a way to get from Haight Ashbury in San Francisco – one birthplace of the Sixties countercultural movement – to Silicon Valley, it’s a rather tortuous one, and you have to leave plenty of left-wing ideals by the wayside: corporate America’s selective appropriation of creativity and all its talk of diversity does not prove that left-wing radicals inadvertently helped establish the neoliberal order. True, as Gerstle points out, both neoliberals and the leftist Ralph Nader, whose “Nader’s Raiders” – public interest advocates and watchdogs – played roles in the Carter administration, and both cared about consumers more than the fate of workers. But the former celebrated supposedly free choice as “consumer sovereignty”, whereas the latter sought to use government to protect consumers – after all, unlike Hobbes’s sovereign, the consumer is not immortal when car manufacturers neglect safety for profit, as Nader’s famous 1965 book, Unsafe at Any Speed, argued.

Gerstle’s ecumenical perspective on what can count as a source of neoliberalism is the result of stressing broad continuities between 19th-century liberal ideals of autonomy and individuality and contemporary neoliberalism. Representatives of liberalism added the “neo”, Gerstle claims, because by the 1930s progressives and social democrats had stolen the term “liberal” for their state programmes. But those who added the “neo” did not show a particular concern with what Gerstle calls “one of history’s great terminological heists”. They felt instead that 19th-century-style laissez-faire had been at least partly responsible for the political and economic catastrophes they were witnessing. They wanted a strong state which actively curated competitive markets and made sure that individual citizens – through religion, family values, and so on – remained morally robust characters ready to face daily struggles under capitalism. It is true that 19th-century liberals hadn’t called for the abolition of government either; but their nightwatchman state was rather more restrained than the neoliberal policeman-preacher state which would actively discipline both markets and people.

In any case, who stole which term from whom is not so obvious: social democrats in the early 20th century – including some “New Liberals” such as Leonard Hobhouse in Britain – argued that socialism was the legitimate heir of liberalism. Liberals had failed to understand the socio-economic preconditions of freedom; precisely because they prioritised freedom, rather than equality, socialists would now build welfare states that provided the security needed for the unfolding and flourishing of individuality. In their own minds, social democrats were fulfilling what Gerstle calls the original liberal “promise of emancipation”.

If neoliberalism was less about freedom than about discipline, the image of Clinton and Tony Blair as converts to market competition and cosmopolitanism – but somehow still hip-ish at heart – becomes more complicated. After all, Clinton also presided over mass incarceration and workfare programmes designed to discipline supposedly lazy folks; meanwhile, Blair’s authoritarian streak manifested in ever more surveillance of British society and policy innovations such as the Asbo and attempts to introduce ID cards.

[see also: Hillary Clinton: “I don’t think the media is doing its job”]

While Clinton and Blair were cheerleaders for technology and globalisation, it is harder to see that their stances really amounted to cosmopolitanism in any meaningful sense: borders might have become more porous, but hardly “open”; these Third Way leaders celebrated diversity, but did not push for global equality in the sense of anything like worldwide redistribution of resources. Here, the dangers of writing the history of one’s own time become apparent: what looks like an even-handed analysis of left and right in fact adopts some of the ideological frames of today’s populist right (which relentlessly accuses liberals of being “rootless cosmopolitans” sneering at poor “somewheres”).

In other respects, Gerstle reminds us of recent forgotten history that continues to shape our world. He details how under Reagan, TV and radio were liberated from regulations meant to give voice to a variety of political positions; the results were the right-wing talk radio hosts and Fox News, who today are closer to steering the Republican Party, rather than merely serving as its propaganda wing. Clinton acquiesced, not even trying to reinstate the “Fairness Doctrine“ Reaganites had abolished. Gerstle also shows how the political arch-enemies of the 1990s – Clinton and House speaker Newt Gingrich – worked together behind the public scenes of political and personal invective to give Silicon Valley the lax internet legislation it craved.

The financial crisis of 2008 is the obvious moment – analogous to the stagflation of the 1970s – with which to begin the story of the neoliberal order’s decline and fall. But other failures early this century also undermined confidence in freedom-as-deregulation, especially the foreign disasters caused by George W Bush & Co, who assumed, with capitalism unleashed, Iraq would flourish overnight. The notion that one need not plan or pay much attention to policy details because government never worked well anyway was propounded by Reagan, but the former Hollywood actor actually relied on experienced Republican bureaucrats to restructure the American state; the triumphalist Bushies, by contrast, had started to believe their own propaganda.

The two most surprising political careers of the past decade are Gerstle’s main proof that the neoliberal order is falling apart: he avoids the facile symmetry in portraying Donald Trump and Bernie Sanders as a right-wing and left-wing populist respectively. True, both attacked free-trade orthodoxies. But one has been a mortal danger to democracy; the other, while attacking Wall Street, is still a politically moderate figure by the standards of, for example, 1970s Scandinavia. The ways they benefited from the specifics of the Obama presidency – the last real neoliberal in power – also differed drastically: Trump promised to restore white supremacy; Sanders thundered that the Obama administration, still dominated by Nineties neoliberals like Larry Summers, had been soft on finance after 2008.

Is neoliberalism dying? It is remarkable that terms such as oligarchy are no longer seen as evidence of un-American sectarianism in Democratic primary debates. At the same time, if Gerstle is right, and the path to every new order is created by countless activists and intellectuals, it seems a stretch to claim that socialists are taking over the Democratic Party. Trump did brag about factories relocating to the US – but working-class conservatism remains a chimera, both intellectually and politically: it lacks coherent policies no less than an actual vehicle to achieve power (the current Republican Party isn’t it). Meanwhile, what Gerstle calls Trump’s ethno-nationalism – he could have used a less polite term – was not as much of a break with the Reagan formula than often suggested; after all, Reagan combined white supremacy (but softened by charm and Hollywood-honed humour) with paeans to the market and the military.

Gerstle stresses the importance of the communist threat in legitimating the New Deal and Republican acquiescence to it: the US had to offer workers something to blunt the Soviets’ critique of capitalism. By implication, the discrediting of communism by the 1970s (if not before) was a boon for neoliberals, who then also – a point Gerstle underplays – used international institutions such as the World Trade Organisation to entrench their beliefs in a global order. But China’s Leninist version of capitalism does not provide a real alternative; and while Covid may have re-legitimated certain forms of state action, it would be a mistake to think that the anti-libertarian lessons of the pandemic are self-explanatory: plenty of people assumed 2008 would automatically help the left; the political force that benefited most from it turned out to be the Tea Party.

A somewhat similar theory of political time and long-term trends in American politics, by the political scientist Stephen Skowronek, suggests that a new regime (Skowronek’s term for Gerstle’s order) will only be established after a decisive repudiation of the existing one. In 1980, Reagan won 44 out of 50 states; in 1984 he carried all but one. Some had expected Biden to achieve something similar after Trump’s shambolic presidency, which – never mind the ethno-nationalism – produced no real legislative success other than yet another massive tax break for the wealthiest. But the repudiation failed to materialise. We might have to live in the ruins of the old order for quite some time, without anything new being constructed. And as Gramsci pointed out, a political interregnum gives birth to monsters.

The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era
Gary Gerstle
Oxford University Press, 272pp, £21.99

[See also: What Dominic Raab missed about Angela Rayner at Glyndebourne]

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