The Excruciatingly Painful, Slow Death of Neoliberalism

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The ultimate bi-partisan ideology, neoliberalism ascended with Reagan and Clinton, then Obama, now it's finally over...

Jacobin - August 2019

"To anyone who lived through the Clinton years — or merely remembers the Obama era — the discrediting of neoliberal ideas that were once sacrosanct among Democrats is nothing short of astonishing."

Cheer up. The Left is winning the battle of ideas. Ideas are the basis for organization, and organization is prior to change. The signs are in the evolution of statements and platforms presented by Democratic presidential candidates. As the economist John Maynard Keynes wrote, eighty and some years ago:

Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.

It’s our “madmen” (and women) who are more in evidence these days — not as public personalities, but in the guise of campaign commitments offered by leading Democratic politicians. Their ascendance parallels the decline of neoliberal ideology.

In this essay, I’d like to give credit where it is due for the raising of consciousness. In the process, I would like to foster a keener appreciation for the difference between progressive and neoliberal doctrine. What does it mean to be left these days? Everybody knows the extreme point — wholesale socialization of the commanding heights of the economy. But where is the separation between hackneyed liberalism, “woke” and otherwise, and emerging progressive platforms?

It does not always pay to highlight differences. But our ambitions go well beyond a restoration of the old order under Barack Obama or Bill Clinton. For one thing, the not unlikely shortcomings of a President Joe Biden could lead us straight back to the current dilemma, perhaps with a younger, smarter version of Trump. Senators Josh Hawley of Missouri and Tom Cotton of Arkansas wait impatiently in the wings, tanned, rested, and ready to wreak havoc anew. We bitterly recall the triumphant victories of 1992 and 2008. Democrats won the White House and held both houses of Congress; then they stunk up the joint, leading to the midterm electoral debacles of 1994 and 2010.

The urge to paper over differences, in the interests of antifascist unity, intermingles with sympathy for the old liberal verities and a reluctance, if not an incapacity, to offer a forthright critique of progressive alternatives. Among friends, the label “neoliberal” is often taken as an insult. The desire by liberals to avoid being flanked on the Left is strong. Of course, being “more left” is not necessarily better, much less a sign of virtue. There have always been virtuous liberals and low-down radicals.

From my own policy standpoint, I would assert that the radical or progressive option is not intrinsically preferable to the neoliberal: we need to get down to cases. Here are some leading examples of the dwindling currency of neoliberal thinking.

Up From Deficit Reduction

By now the Republican hypocrisy on “fiscal responsibility” has become blindingly obvious: nondefense spending is always bad because it increases the national debt, tax cuts are fine even though they do the same. The political scam here may be more plain than the economic. Democrats understand that if they undertake the onerous task of closing budget deficits with unpopular tax increases and spending cuts, it only sets up the other side to make hay in the next election, then in office to blow up the deficit all over again. We’ve seen this three times since 1980.

The economic bankruptcy of deficit reduction remains elusive to many Democrats. In increasingly globalized capital markets, the impact of higher deficits on interest rates and the fabled “crowding out” of investment have failed to transpire. Neither low unemployment nor monetary stimulus from the Federal Reserve set off ruinous hyperinflation, contrary to the conventional wisdom.

The growth in popularity of Modern Monetary Theory has further winnowed the ranks of liberal budget balancers. An exception is Mayor Pete, who had the fortitude to identify himself as an outlier. In this case, the exception proves the rule, which is that deficit reduction and a balanced budget have been removed from the panel of Democratic hot buttons. ...
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