Our political terrain has changed and the Left needs to adapt quickly. Neoliberalism, which came to prominence first within the Republican Party and then achieved dominance in the Democratic Party under Bill Clinton, had been on the defensive since the 2008 Great Recession. Now, even the Financial Times has declared its demise.
The Republican Party has shifted from a primarily neoliberal agenda to the MAGA movement, turning the party into what Bill Fletcher, Jr. has called a “party for dictatorship.” A handful of Republicans want to return to more focused neoliberalism and others are looking for a more centrist approach.
The Democratic Party is divided. An energized progressive wing has pushed for dramatic changes, and a large section of the party has been receptive—Biden’s policy agenda reflects a serious shift. But the neoliberal wing is still strong. Joe Manchin, for example, continues to adhere to a neoliberal position on government spending; whether this comes from ignorance, or personal greed, or corruption is not clear. But he, and others including Krysten Sinema, now represent the margins of the Party instead of its center.
The Left needs to understand these rifts and strategize accordingly. Democratic electeds from the President on down and their economic advisers are exploring new ground. Space has opened within the Democratic Party for progressive, even radical, explanations of current economic conditions and related policy prescriptions.
But there are also opportunities to form alliances with former opponents around some shared goals, such as defending democracy and defeating the Trumpists. When should we make alliances and under what terms?
Things have changed
Neoliberal ideology first became visible within the Republican Party in the 1970s, eventually gaining prominence in the Democratic Party in the 1990s. By the 2000s, neoliberalism was hegemonic in many parts of the world, including within several European left-leaning and social democratic parties.
In the aftermath of the 2008 Great Recession, neoliberalism has been increasingly on the defensive. While it still has a stronghold in many areas, we argue that neoliberalism is no longer hegemonic in the Democratic Party specifically.
That doesn’t mean neoliberalism is dead. Joe Biden is not FDR or Eugene Debs. But those who argue that nothing has changed within the Party and under Biden are missing the mark. While Biden has not adopted the full Sanders platform, the positions his Administration has put forward (and made a real effort to achieve) suggest a rupture from what came before, in economic and political terms.
Neoliberalism is generally defined as a political project grown in response to the economic crises of the 1970s and the growing power of workers and social movements in the post-WWII period. The post-war political and economic arrangement focused on full employment, economic growth, and citizen welfare, employing state power (often in place of market mechanisms) to achieve these ends. It relied on fiscal policy to dampen the swings of business cycles and intervened heavily to set and establish social programs and set wage floors.
Wages were rising, and popular uprisings (by labor, women, students, and liberation movements by Black and Brown people in the U.S. and abroad) were overlapping with systemic shocks that were generating major profitability crises for the capitalist class.
Neoliberalism had been a political project in waiting, living in the margins of mainstream politics until its time came in the 1970s and ‘80s. It was a project to restore power to capitalists by curbing the power of organized labor and ‘dis-embedding’ capitalist class (entrepreneurial and corporate) activities from social and political constraints. This included shredding labor and environmental regulations, outsourcing public services, corporate tax cuts and more.
But it was also an attack on the very notion of democracy, as some of the early neoliberal thinkers thought that allowing voters to determine economic policy was dangerous and that it should be governed by markets rather than voters and politicians. Consumers get to “vote” with their dollars. And as Margaret Thatcher famously claimed, it was premised on the idea that “there is no such thing as society.” Indeed, neoliberalism rose to prominence as part of a backlash attack on the racial and gender justice movements of the 1960s and 1970s. The economic ideology was intertwined with “Reaganism” that emerged in the 1980s.
Although neoliberalism calls for “small government,” it relies on the state to create and preserve an institutional framework that advances strong private property rights, free markets, and free trade. (“Free” in these cases came to mean “managed by private interests.”) It promotes the expansion of “markets”—in practice, large, powerful private entities—into all aspects of life, from for-profit charter schools to privatized water. At the same time, it relies on a heavy state presence to crush social movements, incarcerate Black and Brown people, and instill fear. And some neoliberal thinkers saw a role for the state to impose traditional morality: encourage patriarchal nuclear families and conservative Christian values.
Neoliberalism and the Democrats
Though Reagan is generally seen as the first U.S. president to take an aggressive role in restoring capitalist power in the post-war years, some of the earliest steps of neoliberal policy came in under President Jimmy Carter and a Democratic House and Congress. Carter pushed to deregulate several key industries, arguing that increased competition was good for economic growth. The mid-1980s saw the neoliberal wing of the Democratic Party emerge, represented by Gary Hart, Dick Gephardt, and others who were closely connected to capitalists looking to restore profit and crush social movements. They fought successfully to wrest control from the old party liberals like Mondale and the multi-racial social democratic insurgency of Jesse Jackson.
By the Clinton years, these neoliberals were hegemonic in the party, reflecting a broad right consensus in both parties.
As Andrew Marantz wrote in The New Yorker, the neoliberal political project inside the party established its leadership through a governing regime of policies, institutions, ideas, and electoral strategies. It established a common sense of how society should be governed and what political and economic outcomes were possible.
Marantz quoted Obama: “Through Clinton and even through how I thought about these issues when I first came into office, I think there was a residual willingness to accept the political constraints that we’d inherited from the post-Reagan era. Probably there was an embrace of market solutions to a whole host of problems that wasn’t entirely justified.”
The Biden administration
Against most expectations, the Biden administration pursued policies that flipped key neoliberal tenets on their head, through massive social spending on universal pre-kindergarten, direct cash payments for childcare, free community college, and support for the era-defining PRO Act, which could remake the terrain of organized class forces in the U.S.
At the moment, few or none of these ambitious policy proposals have become permanent law, and they are unlikely to pass in the fullness of their ambitions. But the fact that the administration has been willing to use its early political capital to lead with a set of ideas and laws intended to restructure so much of the last four decades worth of governance is, at the very least indicative of a declining hegemony of neoliberalism.
One notable area of change is the embrace of industrial policy. While leading Democrats have been reluctant to adopt the term, or even admit they are pushing it, the mainstream of the party appears to be on board with the idea that the state must invest in developing and growing key sectors of the economy, at least for the purposes of economic growth, job creation, and nationalist competition.
We have also seen a shift away from purely individualist solutions, towards acknowledging that there are public problems that require public solutions. While a few key Senators were able to block legislation, we saw unprecedented support within the Democratic Party for policies such as paid family leave, childcare tax credits and expansion of public goods. These were marginal ideas only a few years ago.
This doesn’t mean that there is a modern New Deal hegemony in the White House and in the party. In fact, there are warring visions about how to move forward. Some cling to neoliberal solutions and continue to push for privatization and deregulation. Biden himself has pushed to privatize Medicare. Other solutions are based in anti-China nationalism. But overall, we see ideological incoherency.
There is both an opportunity and a potential threat in the fact that there is no clear alternative hegemony.
The party membership has become higher income, higher education, and higher wealth. And the party’s capacity to actually win real legislation most recently has been based on anti-China competition and chauvinistic national politics, which will hardly be a sufficient bulwark against the right moving forward.
Nonetheless, the openness of the party to progressive governing strategies, in this period of imminent authoritarian threats from the right, compels us to be clear about left strategy in this moment.
There are many ways to be pro-capitalist; neoliberalism is only one of them. To say Biden is moving from neoliberalism is not to argue that he is rejecting capitalism. But even though Biden’s proposals are less ambitious than those of Sanders or Warren, they are far from neoliberal, which is a promising first step.
Openings for the Left
We focused here on neoliberalism within the Democratic Party, but the hold of neoliberalism on the Right has also weakened, and a protectionist-authoritarian right wing is on the rise. This authoritarianism is our main threat; without democracy, there is no possibility of a long-term Left-led transformation. We have focused on the U.S., but these same tendencies can be seen in many countries around the world.
Our task is to stitch together the left-progressive bloc, and fight to maximize its influence within the broader alliance needed to beat back the authoritarian Right. The Democratic Party is shifting, and while there are still forces in it that see the Left as the big enemy, those forces are weakening; the Democrats are closer to being allies than they have been in 40 years at least. Non-neoliberal policy is widely popular, including among Republicans, and could be a way to get some on the Right to shift to the Left (think of union members who voted for Sanders but not Clinton).
There is an opportunity in this opening and in the uncertainty of the waning of neoliberalism to reassert a different, new common sense, something like a Third Reconstruction, a multi-racial social democracy.
But the Left is unprepared, so we must organize. We must build broadly, build independent political vehicles, and engage in relevant political struggles to shape society as it exists while we struggle for a different future. With neoliberalism’s antidemocratic agenda in retreat, the left can help make sure that the choice between true democracy and autocracy is made clearly and urgently.
Featured image: Children at daycare in San Mateo, CA. Policies such as childcare tax credits have moved from the margins to the mainstream of the Democratic Party. Photo by Grant Barrett, San Mateo, CA, licensed CC BY 2.0