The last gasp of (US) neoliberalism

The defeat of the “trade promotion authority” bill in the US Senate marks a big setback for Obama’s attempts to push the (still secret) Trans-Pacific Partnership agreement through Congress. As always, there’s plenty of manoeuvring to come, and the deal may still get up, but even so, it looks like the last gasp for the neoliberalism, in the US sense of the term.

In global terms, neoliberalism, epitomized by Thatcher in the UK, is an appropriation by conservative/reactionary parties of the economic component of classical liberalism, but without any of the associated concerns with personal freedom, except as this coincides with the desires of conservatives and reactionaries to maintain a social order where they can do as they have always done.

By contrast, US neoliberalism is a development from within US liberalism, closer to Blair’s Third Way than to Thatcher. In general, neoliberalism maintained and even extended “social liberalism”, in the US sense of support for equal marriage, reproductive choice and so on. In economic terms, its central claim was that the goals of the New Deal, central to Democratic Party politics, could best be pursued through market-friendly policies that would earn the support of the financial sector (the only major business sector that was prepared to back Democrats, or at least to bankroll suitable candidates from either party). Apart from subservience to Wall Street, the signature issues for US neoliberals were free trade, cuts in “entitlement” spending, and school reform[^1]. In terms of political strategy, the big idea was a ‘grand bargain’, in which Republicans would accept minimal increases in taxation in return for the abandonment of most of the Democratic program.

The Clinton administration was explicitly neoliberal in all respects. Bush ran on a platform of “compassionate conservatism” designed to appropriate the appeal of neoliberalism, and was never really able to break with it. And, while Obama’s 2008 election campaign was masterfully ambiguous, his first Administration neoliberal through and through, dominated by Wall Streeters like Paulson, Geithner[^2] and Summers, and by neoliberal operators like Emanuel[^3] and Duncan. And the same would clearly have been true if Hillary Clinton had been elected.

But developments since then, including the global financial crisis, the failure of school reform[^4] and increasing awareness of entrenched inequality have destroyed the appeal of neoliberalism. It’s obvious by now that the neoliberal policy agenda belongs to the political right, and the backers of that agenda (for example, Wall Street and education reformers like Michelle Rhee) have recognised that fact as clearly as anyone.

The result has been a significant shift to the left in the second Obama Administration, reflected in more populist rhetoric, the abandonment of the search for bipartisanship and in some substantive policy shifts, for example on minimum wages. The big exceptions are issues like the TPP and the security state, where Obama was captured by the permanent government almost from day 1, and has never shifted.

Hillary Clinton is making similar adjustments, realizing that a purely cultural claim to affinity with working class whites, combined with an actual alliance with Wall Street, is no longer going to cut it electorally or within the Democratic Party. She’s maintained silence on the TPP so far, but I predict that, when she can no longer avoid the issue, she will be forced to come out against it.

What does this mean for the future of the Democratic Party? I’ll leave that up to readers for the moment.

[^1]: I’ve decided not to bother with scare quotes around “reform”. The word has been successfully appropriated by neoliberals, both in the US and global senses.
[^2]: Geithner didn’t work on Wall Street until after his Treasury stint. But the NY Fed is pretty much a subsidiary.
[^3]: I’ve read that Emanuel was the model for Josh Lyman in The West Wing, the fictional apotheosis of neoliberalism.
[^4]: Reliably metronomic centrist Nick Kristof said a while back that, while he still supported school reform, the topic was now so politically toxic that he would focus instead on early childhood interventions where there is enough actual evidence of benefit to garner some broadbased support.

28 thoughts on “The last gasp of (US) neoliberalism

  1. Neoliberalism may be ending. The real issue is the way that it is creating the conditions for what follows it. There is an emerging tendency in which neoliberalism has shown capital that it doesn’t need democracy. The militarization of policing, now a global trend, appears to offer the oligarchs an attractive alternative to liberal democracy. This means that endless global war will not be fought in other states alone. It will be fought at ‘home’ on grounds of class, ethnicities, sexualities, ideas, religious affiliations and exclusion. Altogether a dystopian picture.

  2. @Jack Strocchi

    Not excused by me, I lived through a significant part of her tenure at Downing Street. She did immense harm to the UK economy and society generally. Of course she did not recognise the existence of “society”. As far as many in the UK are concerned, had the terrorists succeeded it might have actually been a better outcome for them.

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