Time for a change: Can 2020 Democrats break free from the failures of neoliberalism?

The dramatic health care shift is just one facet of a much broader transformation that a younger, increasingly diverse electorate is demanding — a transformation leading away from the Democrats’ decades-long infatuation with neoliberalism, with a similar expansion of support for ideas like a $15 minimum wage, debt-free college education, taxing the wealthy, a federal jobs guarantee and a Green New Deal.

Up until 2016, leading Democrats had accepted the basic premises of conservatives (“The era of big government is over,” Bill Clinton famously proclaimed), while still claiming continuity with traditions they had largely abandoned. Typically, as exemplified by “welfare reform” (my 2010 critique here), means-testing would replace universal programs, with success defined by reducing costs and the number of people served, rather than by improving people’s lives. Clinton’s presidency followed a path laid out by Charles Peters, founder and editor of the Washington Monthly, in his influential 1983 essay, “A Neoliberal’s Manifesto,” where he put it thus:

We still believe in liberty and justice for all, in mercy for the afflicted and help for the down and out. But we no longer automatically favor unions and big government or oppose the military and big business. Indeed, in our search for solutions that work, we have to distrust all automatic responses, liberal or conservative.

In short, neoliberals argued they shared liberal/left values, but favored "more practical solutions."

But time has shown them not to be more practical after all, as Democratic activists and base voters have increasingly come to realize. The question in 2020 is how the party as a whole evolves, how it honestly comes to terms with its past. It’s a question that all the presidential hopefuls must grapple with — and their supporters as well.

Economic policies like NAFTA and Wall Street deregulation represent core neoliberal failures in the economic realm that stretch back long before Peters, as described by economic historian Philip Mirowski (“Never Let a Serious Crisis Go to Waste”) and colleagues (“The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective”). But the economic vision has profound social consequences, as Mirowski elsewhere notes: “While neoliberal think tanks are busy riling up the groundlings with debt clocks and boogeyman statistics of ratios of government expenditure to GDP, neoliberal politicians organize to extravagantly increase incarceration and policing of those whom they deem unfit for the marketplace.”

A whole host of such offshoot policies incubated by Peters, his colleagues and funders — mass incarceration, school privatization, welfare reform, etc. — have likewise been discredited as well, with profound impacts on the unfolding 2020 presidential primary race. A growing awareness of how these failures are linked, and what's required to replace them, ought to play a significant part in that race. If it does not, Democrats risk needlessly repeating past failures and handing Republicans yet another chance to make things dramatically worse.

Republicans are doing that right now, imposing work requirements to roll back Medicaid expansion, even as new research shows welfare reform had significant negative impacts on children: The "intergenerational effects of welfare reform on adolescent behaviors were unfavorable, particularly for boys, and do not support longstanding arguments that limiting cash assistance leads to responsible behavior in the next generation.”

In sharp contrast, a recent New York Times Magazine article documents how much the living wage delivers: “A living wage is an antidepressant. It is a sleep aid. A diet. A stress reliever. It is a contraceptive, preventing teenage pregnancy. It prevents premature death. It shields children from neglect.”

The choice couldn’t be more clear between what works and what doesn’t. But the need to break decisively with past failures poses challenges for potential 2020 candidates. As a former chair of the Senate Judiciary Committee, Joe Biden faces a difficult task explaining his key role in helping to expand federal mass incarceration policies — just one of several now-dormant topics that may play a role in keeping him out of the race, so far.

Similarly, as former prosecutors, Sens. Amy Klobuchar and Kamala Harris perfectly fit the neoliberal formula for combating conservative attacks against “soft-on-crime bleeding-heart liberals,” but that creates significant tension with the growing momentum of criminal justice reformers, whose bipartisan appeal is reflected in the recently-passed FIRST STEP Act, even as Democratic-aligned activists — Black Lives Matter and others — push for much more.

Klobuchar and Harris aren’t alone. Every potential 2020 candidate has undergone, or is undergoing some sort of evolution — Elizabeth Warren was a Republican for most of her life, for example. Sen. Cory Booker has strong Wall Street ties, including a long affiliation with the hedge fund group, Democrats for Education Reform (DFER), described by Justin Miller in 2016 as established “with a mission to break the teacher unions’ stranglehold over the Democratic Party." As Miller noted:

Early on, DFER identified then-Senator Barack Obama and then–Newark Mayor Cory Booker as promising politicians willing to break with teachers unions. DFER was instrumental in convincing Obama to appoint charter-friendly Chicago Superintendent Arne Duncan as secretary of education, and it spent a lot of time and money lobbying the administration to pursue reformist education policies like Race to the Top and Common Core.

This style of top-down education reform — supported by elites in both parties — has angered parents, students, teachers and whole communities across the political spectrum, not least because it’s served to both help fuel and distract from massive disinvestments in public education. This in turn helped fuel last year’s wave of red-state teacher walkouts, which clearly fed into midterm victories, This is part of a larger pattern of anti-privatization victories described by Jeff Bryant of the Independent Media Institute. Booker’s record — including his past ties to Betsy DeVos — could be a problem for him, Chalkbeat noted, “sure to draw a skeptical eye from unions and public school advocates.”

My purpose here is not to single out any candidates for their past positions. Every candidate could be attacked for some aspect of their past, which would only serve to make Donald Trump’s day.  What voters care most about is the future — what candidates promise to do, and why — and the past matters most for making sense of what they say, for showing they saw things in the past, how they came to change, and how they see us all moving forward in the future.

Evolution, learning from our past mistakes — is good. We need to encourage more of it, not endlessly get mired down in refighting old battles. At the same time, we need an honest accounting of the past in order to have confidence in politicians’ pledges for the future. And we also need a much more broadly shared sense of what was wrong in the neoliberal agenda, and how that plays out in a multitude of different forms. To do that, it helps to take a step back from looking at specific issues, in order to see more clearly how they all fit together. Recognizing three main mistakes around neoliberalism can help go a long way toward helping to make sense of the way forward.

The first mistaken belief about neoliberalism is that there’s nothing “neo” about it, it’s just plain old-fashioned Lockean liberalism. Jonathan Chait has made this mistake most loudly (“How ‘Neoliberalism’ Became the Left’s Favorite Insult of Liberals”), but Mirowski makes it clear how mistaken that is.

“In a nutshell, classical liberalism imagined a night watchman state that would set the boundaries for the natural growth of the market, like a shepherd tending his flock. Markets were born, not made,” and they existed to serve human society. “The Neoliberals were having none of that,” Mirowski wrote. Markets were to be the master:

Far from trying to preserve society against the unintended consequences of the operations of markets … neoliberal doctrine instead set out actively … to reshape it in the market’s image.

In short, neoliberalism is a technocratic perversion of classical liberalism, rather than an evolutionary advancement of it.

A second mistake is to conflate neoliberalism with the mask of economics that it wears. “Neoliberalism — or market fetishism — is not the consistent application of modern economics, but its primitive, simplistic perversion,”as economists Suresh Naidu, Dani Rodrik and Gabriel Zucman recently wrote at the Boston Review. Their article, “Economics After Neoliberalism,” introduced the work of a new group, the Economics for Inclusive Prosperity (EfIP) network. As they explain:

The tools of economics are critical to developing a policy framework for what we call “inclusive prosperity.” While prosperity is the traditional concern of economists, the “inclusive” modifier demands both that we consider the whole distribution of outcomes, not simply the average (the “middle class”), and that we consider human prosperity broadly, including non-pecuniary sources of well-being, from health to climate change to political rights.

To bring things down to earth, one of the policy briefs they introduce is “An Expanded View of Government’s Role in Providing Social Insurance and Investing in Children” by Sandra E. Black and Jesse Rothstein.  The summary explains:

While private provision of goods often yields the efficient outcome, there are a number of goods that are not efficiently provided in the private market. Here, we outline two such situations: investments in child care and education, and insurance against risks created by business cycles, poor health, and old age. Because private markets work poorly for these goods, and the costs of market failure are large, standard economic reasoning implies a significant role for government provision …. We first discuss childhood investments, including expenses relating to child care and early education as well as post-secondary education.

They go on to discuss specific reasons that illuminate why the neoliberal argument for charter schools and other forms of privatization are profoundly flawed, not just from an egalitarian justice perspective, but in straightforward economic terms as well.

Similar kinds of arguments could surely be made around issues of criminal justice reform as, for example. The purported “rationality” of the private prison-industrial complex could hardly withstand such an analysis.

What’s more, this broader framework of “inclusive prosperity” not only serves to clarify the arbitrary, constricted nature of the neoliberal outlook, it fits into an broader framework that elucidates a third mistake: Failing to distinguish how neoliberalism fits into a larger political context, which produces different incarnations, as described by New School professor Nancy Fraser in the article "From Progressive Neoliberalism to Trump and Beyond," which I cited last year.

Fraser speaks in terms of 'hegemonic blocs,' a term developed by the Italian Marxist Antonio Gramsci, which she develops further as involving two aspects:

The distributive aspect conveys a view about how society should allocate divisible goods, especially income. This aspect speaks to the economic structure of society and, however obliquely, to its class divisions. The recognition aspect expresses a sense of how society should apportion respect and esteem, the moral marks of membership and belonging. Focused on the status order of society, this aspect refers to its status hierarchies.

“Progressive neoliberalism” might sound self-contradictory, she notes, but it “combined an expropriative, plutocratic economic program with a liberal-meritocratic politics of recognition,” such that:

Protecting the environment meant carbon trading. Promoting home ownership meant subprime loans bundled together and resold as mortgage-backed securities. Equality meant meritocracy.

In contrast, progressive populism calls for something different:

Combining egalitarian redistribution with nonhierarchical recognition, this option has at least a fighting chance of uniting the whole working class. More than that, it could position that class, understood expansively, as the leading force in an alliance that also includes substantial segments of youth, the middle class, and the professional-managerial stratum.

The two aspects — recognition and redistribution — can be viewed as more complementary frameworks for developing the full meaning of the “inclusive” modifier that Naidu, Rodrik and Zucman introduced.

Ideally, the Democrats' 2020 primary campaign could and should involve a full-throated debate about the best ways to realize the full meaning of inclusive growth, including all the non-economic dimensions of recognition as well. It should flesh out specific aspects of what progressive populism means, and how to achieve its goals. It should promote sound policies to advance inclusive growth. And it should reclaim the once commonsense idea that while the market can be a good servant, it makes a terrible, tyrannical master.