The Achilles Heel of Neoliberalism

Last week, I called out the fallacy underlying Slate’s two-part series on how to revive progressivism’s agenda (“What’s Left?” Part 1 and Part 2). Its authors proposed a menu of new goals for progressivism—everything from ending the war on drugs to improving public schools, and even closing the widening gap between the rich and poor.

I countered with the observation that most progressives already do care deeply about each and every one of those issues. If they haven’t been properly addressed, it’s because they’re not high on the agenda of the Democratic Party, or to put it more baldly, because the Democratic Party is insufficiently progressive.

This isn’t to say that the parties are Tweedle Dee and Tweedle Dum, that there are no discernible differences between them, or that strategic-minded progressives should cast their ballots for third party candidates in national elections.

For all its flaws (and they are legion) the values of the Democratic Party and many of its policy prescriptions at least nod in a more progressive direction than the GOP’s. As flawed as Obamacare may be, it stands in stark contrast to Republican efforts to eliminate Medicaid and privatize Social Security and Medicare; minority voters are less likely to be disenfranchised by Democratic legislators than Republican ones; Republicans are more likely to defund Planned Parenthood clinics, eliminate food stamps, and draft “Stand Your Ground” laws than Democrats.

 

A truly progressive Democratic party would recognize that it should be looking to alienate those on the “upper reaches of the income scale,” lest its friendliness be mistaken for an invitation to be corrupted. The fact is, progressivism does seek to redistribute some income downward. But if it is politically risky to acknowledge that, it is political suicide to ignore the fact that neoliberalism has allowed the lion’s share of the country’s wealth to be redistributed to the rich.

But if Republicans have a corner on noxious Christianism and Atlas Shrugged-style libertarianism, they share an economic consensus with the mainstream of the Democratic party that is essentially neoliberal.

The mainstreams of both parties (and the authors of the Slate pieces, with their nods to the greatness of capitalism and their cautions against alienating the upper reaches of the income scale) pay extravagant fealty not just to private enterprise’s presumed efficiencies but to its supposed impartiality; both operate on the faulty assumption that the marketplace is not just more vigorous in its operations than the government, but more virtuous in its results. Both are prey to the false consciousness that private wealth is a public good—that the portfolio of an Apple or Bank of America stockholder provides a reasonable proxy for the prosperity of the country at large.

Perhaps the closest thing to a populist hero that the Democrats have is Massachusetts Senator Elizabeth Warren. But for all the vitriol she inspires from the right, many of her talking points could come from a Frank Capra movie.

“Washington is wired to work for the big guys, the ones who can hire armies of lobbyists and lawyers,” she said when she was running for the Senate. “We need to put Washington on the side of middle-class families again. Fixing the system is going to take better disclosure rules, some kind of public funding system for elections, serious action to reverse Citizens United, and most importantly, people across the Commonwealth and the country pushing for a democracy in which everyone’s voice is heard.”

She’s right, of course, but she is putting the onus on Mr. Potter or the Koch brothers rather than the system itself. She is paraphrasing Bill Clinton’s first inaugural, which said there is nothing bad about our system that can’t be fixed by what’s good in it.

All those armies of lobbyists and lawyers, those subsidies for FreedomWorks and Americans for Prosperty and American Crossroads, don’t come from nowhere. “People of the same trade seldom meet together,” Adam Smith famously wrote, “even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Just as gamblers are always looking to better their odds, businessmen are forever striving to make the market work to their advantage. But while gamblers don’t have many legal options besides counting cards, business people can and do try to buy lawmakers. What begins as an illegal conspiracy may end with a new set of laws. It is free-market capitalism’s Achilles heel.

Neoliberalism’s exclusive faith in privatization and deregulation misses an essential point about government—one that was perhaps best articulated by every Republican’s favorite economist Milton Friedman, in his landmark 1951 essay “Neoliberalism and its Prospects.”

The collectivist belief in the ability of direct action by the State to remedy all evils is … an understandable reaction to a basic error in 19th-century individualist philosophy. This philosophy assigned almost no role to the state other than the maintenance of order and the enforcement of contracts. It was a negative philosophy. The state could do only harm. Laissez-faire must be the rule. In taking this position, it underestimated the danger that private individuals could through agreement and combination usurp power and effectively limit the freedom of other individuals; it failed to see that there were some functions the price system could not perform. (emphasis added)

Even Friedman (pictured), the trusted advisor to British Prime Minister Margaret Thatcher, Chilean authoritarian Augusto Pinochet, and President Ronald Reagan, allowed that government should have “the function of relieving misery and distress … our world has become too complicated and intertwined … to leave this function entirely to private charity or local responsibility.”

I haven’t quoted Friedman at such length because I believe that neoliberalism is a philosophy that can be redeemed; only to point out how far its Republican acolytes have strayed from its original conception—and to embolden Democrats to stray even further in the opposite direction.

A truly progressive Democratic party would recognize that it should be looking to alienate those on the “upper reaches of the income scale,” lest its friendliness be mistaken for an invitation to be corrupted. The fact is, progressivism does seek to redistribute some income downward. But if it is politically risky to acknowledge that, it is political suicide to ignore the fact that neoliberalism has allowed the lion’s share of the country’s wealth to be redistributed to the rich.

 

Arthur Goldwag is the author of Isms & Ologies; Cults, Conspiracies, and Secret Societies, and most recently The New Hate: A History of Fear and Loathing on the Populist Right. He lives in Brooklyn with his wife and two children. Follow him at @ArthurGoldwag